The objective of the Real Property Law Sections's Pro Bono Committee is to serve the real property needs of the low income citizens of the state of Michigan and to educate the general public on common real property law matters. The Committee has initiated and coordinates several programs served by the Section's members. These include the Committee's Pro Bono Mentor Volunteer Program providing support for pro bono case volunteer attorneys and the Michigan Land Title Association's Pro Bono Service Program coordinating the volunteer services of the title insurance industry to provide title searches for pro bono case volunteer attorneys. The Pro Bono Committee drafts and distributes educational brochures to Legal Services Corporation offices, human service agencies and other points of distribution throughout the state.
Predatory Lending and High Cost Loan Information
Predatory lending is harmful to Michigan’s citizens and communities, sometimes even including nearby property owners who do not borrow money. Unsophisticated individuals may fall victim to high pressure sales tactics, bait and switch schemes, fee packing, equity stripping, loan flipping and other predatory, abusive, unfair and deceptive practices, and they may lose the equity in their homes and sometimes their homes because they accept financing that they cannot afford. This is a problem facing the entire community, and not just those who accept these loans. Mortgage foreclosures can lead to neighborhood neglect, reduced property values, and a loss of property tax revenues. Your best protection against these practices is to become aware of how to shop for credit, and to find the best financing arrangements for your credit circumstances and needs. Even if you are aware of and avoid predatory lending tactics, you should still be aware of the risks of high cost loans. High cost loans are sometimes appropriate, but the costs and risks of accepting a high cost loan are great. Below are some helpful links were you can find more information about shopping for credit, predatory lending, and high cost loans.
Agencies Provide Consumer Information on Nontraditional Mortgage Loans
The federal bank, thrift, and credit union regulatory agencies today announced the publication of a new resource that can help consumers make more informed choices when considering nontraditional mortgage loans.
Interest-Only Mortgage Payments and Payment-Option ARMs—Are They for You? features a glossary of lending terms, a mortgage shopping worksheet, and a list of additional information sources. This information can help consumers, whether buying a house or refinancing a mortgage, decide if an interest-only mortgage (an I-O mortgage) or an adjustable-rate mortgage (ARM) with the option to make a minimum payment (a payment-option ARM) is right for them.
The publication stresses the importance of understanding key mortgage loan terms, warns of the risks consumers may face, and urges borrowers to be realistic about whether they can handle future payment increases. If consumers are not comfortable with these risks, the publication suggests that they ask about other mortgage products.
Many lenders offer home loans that allow consumers to (1) pay only the interest on the loan during the first few years of the loan term; or (2) make only a specified minimum payment that could be less than the monthly interest on the loan. Lenders have a variety of names for these loans, but with I-O mortgages and payment-option ARMs, consumers could face "payment shock." Monthly payments may double or even triple following the interest-only period or when the payments adjust.
In addition, consumers with payment-option ARMs could face negative amortization, a situation in which the monthly payments do not cover all of the interest owed for that month. The unpaid interest is added to the mortgage balance so that the amount owed on the mortgage exceeds the amount originally borrowed.
The interagency information is available on each agency's web site. A PDF version is provided so that consumer groups, financial institutions, agencies, and other organizations can download and print copies for distribution to their clients and customers. It includes a space on the back panel for organizations to provide their own contact information. The web addresses are:
Single copies of the brochure are available free of charge from:
Publications, Mail Stop 127, Federal Reserve Board, 20th and C Streets, N.W., Washington, DC 20551; (202) 452-3245
FDIC Public Information Center, 3501 North Fairfax Drive, Room E-1002, Arlington VA 22226; (877) ASK-FDIC, (703) 562-2200.
Patrick A. Karbowski
McDonald Hopkins PLC
Bloomfield Hills, MI 48304
Dennis B. Barrett
Albert J. Gladner
Bruce M. Gorosh
Vicki R. Harding
David L. Haron
Thomas A. Kabel
*Carol Ann Martinelli
Daniel B. McMahon
Gregg A. Nathanson
Sandra D. Parker
Brian A. Potestivo
James E. Schaafsma
Sarida L. Scott
John R. Turner
*Former chair of this committee