Predatory lending practices are detrimental to a nation’s economy. These practices can have a severe effect on the financial situation of borrowers, from which some might never recover.
However, there are separate laws that can provide protection and settlement to homeowners against such lending practices.
In one such settlement case, around 25,000 New Yorkers, who have been the victims of predatory lending, were provided a settlement equal to $37million.
This amount was announced as a result of agreement between New York State and Household International Inc, a predatory lending firm. Under this agreement, all the borrowers, who had obtained a mortgage loan from Household between January 1999 and September 2002, are eligible to receive restitution. Depending on the money taken, payments range from a minimum of $42 to a maximum of $21,000.
In another instance, Ameriquest Mortgage Company, a California-based lending firm, had agreed to pay $325 million to all the consumers and victims of predatory lending. This was the second largest predatory lending consumer-protection settlement in the U.S. Under this settlement, victims who had obtained mortgage loans between January 1999 and December 2005 were eligible for the settlement. Of these, around 14,180 victims were from the state of Arizona and can expect to receive a total compensation of more than 5 million through this settlement. As per the settlement, Ameriquest will pay $295 million towards consumer restitution and an additional $30 million to the 49 U.S. states and District of Columbia that participated in the settlement agreement. The money is a compensation covering the costs of investigation and consumer education and enforcement.