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- Published: Thursday, 07 November 2013 10:43
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Victory State Bank Points to Harmful Home Equity Practices
STATEN ISLAND, N.Y. -- Victory State Bank wants to help you keep your home and equity where it belongs, with you and your family.Working with the wrong lender can lead to losing you home. The Federal Trade Commission advises you to be on the lookout for:
• Loan Flipping: The lender encourages you to repeatedly refinance the loan and often, to borrow more money. Each time you refinance, you pay additional fees and interest points. That increases your debt.
• Insurance Packing: The lender adds credit insurance, or other insurance products that you may not need to your loan.
• Bait and Switch: The lender offers one set of loan terms when you apply, then pressures you to accept higher charges when you sign to complete the transaction.
• Equity Stripping: The lender gives you a loan based on the equity in your home, not on your ability to repay. If you can’t make the payments, you could end up losing your home.
• Non-traditional Products: The lender may offer non-traditional products when you are shopping for a home equity loan:
For example, lenders may offer loans in which the minimum payment doesn't cover the principal and interest due. This causes your loan balance, and eventually your monthly payments, to increase. Many of these loans have variable interest rates, which can raise your monthly payment more if the interest rate rises.
Loans also may feature low monthly payments, but have a large lump-sum balloon payment at the the end of the loan term. If you can’t make the balloon payment or refinance, you face foreclosure and the loss of your home.
• Mortgage Servicing Abuses: The lender charges you improper fees, like late fees not allowed under the mortgage contract or the law, or fees for lender-placed insurance, even though you maintained insurance on your property. The lender doesn’t provide you with accurate or complete account statements and payoff figures, which makes it almost impossible for you to determine how much you have paid or how much you owe. You may pay more than you owe.
• The "Home Improvement” Loan: A contractor calls or knocks on your door and offers to install a new roof or remodel your kitchen at a price that sounds reasonable. You tell him you're interested, but can't afford it. He tells you it's no problem — he can arrange financing through a lender he knows. You agree to the project, and the contractor begins work. At some point after the contractor begins, you are asked to sign a lot of papers. The papers may be blank or the lender may rush you to sign before you have time to read what you've been given. The contractor threatens to leave the work on your house unfinished if you don't sign. You sign the papers. Only later, you realize that the papers you signed are a home equity loan. The interest rate, points and fees seem very high. To make matters worse, the work on your home isn't done right or hasn't been completed, and the contractor, who may have been paid by the lender, has little interest in completing the work to your satisfaction.
About Victory State Bank:
VSB Bancorp, Inc. (NASDAQ: VSBN) is the one-bank holding company for Victory State Bank. As Staten Island, N.Y.’s only community-based commercial bank, Victory State Bank operates five full-service locations on the Island: The main office in the community of Great Kills, and branches in the communities of West Brighton, St. George, Dongan Hills and Rosebank. For additional information, Victory State Bank may be reached at 718-979-1100 or visited online http://www.victorystatebank.com. .
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