Predatory Lending
9/14/2009
“Frances” inherited her home worth $70,000 from her mother; and although the house had no mortgage against it, she owned $4,500 in delinquent property tax.
Fearing an imminent tax sale, Frances started looking for a loan. A mortgage broker assured her that he could arrange a loan before the tax sale deadline. But as the deadline drew near, the lender stalled. At the last minute, the lender told Frances that the only way to get her the money to pay the taxes was to sell the house to him “temporarily” for $10,000, giving her the right to repurchase it for $40,000 after a year, paying him rent in the meantime. Frances believed she had no choice but to accept the terms. A few weeks later, the lender demanded that Frances pay a security deposit. When she refused, the lender locked her out and marketed the house for sale. When Frances asked LAET for help, a staff attorney succeeded in recovering her home.