Predatory Lending • Home Equity Loans • Home Mortgages • Mortgage Brokers

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Devastating Consequences

George Lenart says he never planned to refinance his 8.5-acre Wooster-area property, which includes his split-level home and two natural spring-fed ponds. He only wanted a $10,000 home-equity loan.

He says he is still not sure how a broker convinced him to refinance his $150,000 home and get a home-equity loan. His interest rate rose to 10.2 percent from 8.75 percent on one loan, and the rate was 12.65 percent on the other. The deal included nearly $6,000 in hidden fees.

The 59-year-old truck driver for Giant Eagle in Bedford would have faced $1,429 in monthly payments, almost double his current $780. "He kept saying, Well we can do this for you and do that,'" Lenart says. "They make it sound so good."

Fortunately for Lenart, he realized something was wrong the day after he signed the loan papers and canceled the contract with a couriered letter last Wednesday. "I can't imagine what would've happened," he says. "There's no way I could have paid that."

Tom Parks wasn't so lucky. Having worked as a mortgage broker himself until last year, Parks certainly didn't think he could be scammed.

But the 40-year-old Lyndhurst man and his wife, Lori, say they became victims of a local predatory lender after they applied for a home-equity loan to consolidate bills. They were charged a 16.759 percent interest rate on a $47,806 loan and $4,232 for credit insurance - an item that legitimate banks don't charge.

When the couple realized the loan didn't cover one of the bills they wanted to repay, they refinanced again with the same company and were charged an additional $5,477 in credit insurance.

When Parks said he didn't feel comfortable signing the documents, "the guy said, You don't have a choice. If you don't sign it, you don't get the loan,'" Parks recalls.

The original $47,806 loan will now cost them $313,052 to repay.

But it will never get to that point, Parks says. The couple, who have 2- and 4-year-old daughters, are contemplating bankruptcy. Their finances are now in such a mess that their house is being foreclosed upon and is to be sold Sept. 6.

Tom, who has spent several hours every week for the last 16 months trying to fix the problems, says he can no longer stand to think about what the lender has done to his family.

"I'm so tired," he says. "Things happen, little things, and I can't take it. Mentally I'm losing it. Why can't somebody do something so this doesn't happen to people?"