GreenPath University brings you the most current personal finance news, industry trends and money management tips to help you make wise financial decisions. Here are some of the latest articles.
New Consumer
Financial Protection Bureau
In January of 2012, President Obama made headlines with his
appointment of Richard Cordray as the first director of the new Consumer Financial Protection Bureau. The consumer bureau is an independent agency created
as part of the Wall Street reforms of 2010 tasked with regulating financial
products such as mortgages and credit cards and payday lenders. Only time will
tell how effective this new bureau will be in terms of consumer protection. More
regulations and new policies may help avoid consumer pitfalls, but they could
also raise costs and increase confusion.
In the meantime, everyone can take action now to better
educate themselves about financial products and how to avoid getting involved
with any predatory lending. Predatory lenders promise loans that are "too
good to be true" and often pressure borrowers to take them on the spot.
Here are a few things you or your family and friends should know about spotting
and avoid predatory loans:
How
to Spot a potentially Predatory Loan:
- Balloon
payments
- High
interest rates or fees
- Monthly
payments you can't afford
- Penalties
for early pay-off of the loan
- Vague
or confusing loan terms
- Damaging
to your credit file
How
to Avoid a Predatory Loan
- Always
shop around
- Ask
questions, and demand answers that are clear to you.
- If you
don't understand the loan terms, talk to someone you trust to look at the
documents for you. Examples – attorneys, credit and housing counselors,
and friends/family.
- Don't
trust ads promising "No Credit? No Problem!"
- Ignore
high-pressure sales tactics.
- Don't
take the first loan you are offered.
- Remember
that a low monthly payment isn't always a 'deal.' Look at the TOTAL cost
of the loan.
- Be
wary of promises to help you modify your mortgage. Loan modifications are
NEVER a guarantee – only the lender can make that decision.
- Never
sign a blank document or anything the lender promises to fill in later.