Debt
Consolidation Texas
Bad debt consolidation loans contribute
to Texas’ home foreclosure crisis
Houston, Texas, October 12, 2007
- - Texas, previously the only state to
prohibit home equity loans, amended its
constitution in January 1998 to allow mortgage
companies to offer home equity loans. Today,
the controversial change, which has given
consumers another option to consolidate
debt, has also created a foreclosure crisis.
Unfamiliar with home debt consolidation
borrowers have put their Texas homes at
risk. By 2008, it is estimated that more
than two million homeowners will lose their
homes through foreclosure. According to
RealtyTrac, for Texas this has meant one
foreclosure for every 205 homes. As of 2007,
the state ranked 10th in the number of foreclosed
homes. Foreclosure proceedings in Texas
are so rampant that Attorney General Greg
Abbott declared Texas as a state in a “foreclosure
crisis.” He also added, “lenders
are contributing to the problem.”
These are particularly subprime debt consolidation
lenders that mislead Texas homeowners with
loans that include hidden terms and exorbitant
fees.
For egregiously issuing questionable debt
consolidation loans to Texas consumers,
the Texas Attorney General and the Federal
Trade Commission have sanctioned Ameriquest
and various other subprime lenders. Their
abusive lending schemes have caused many
Texas homeowners to fall behind on their
debt consolidation loan payments and to
go into foreclosure.
Shady debt consolidation lending, such
as “loan flipping”, has induced
Texas homeowners to repeatedly refinance
their homes to take extra cash out to pay
for needs, such as college tuitions and
home improvements. But each time homeowners
refinanced their loans they’ve ended
up paying huge fees, in some cases, higher
interest charges, and additional prepayment
penalty fees. Borrowers that have taken
out debt consolidation loans extra cash
out have also seen dramatic increases to
their previous loan balances. Facing this
problem, income-challenged borrowers have
missed their debt consolidation loan monthly
payments and subsequently lost their homes
through foreclosure.
A popular debt
consolidation lending practice that
has hurt many Texas borrowers is “credit
insurance packing.” Victims of this
practice take out debt consolidation loans
they could barely afford. But at closing,
the lenders unscrupulously add charges for
credit insurance or other insurance not
needed or requested, thereby causing borrowers
to make a much higher payment each month.
Texans have also been tricked by “mortgage
servicing abuses.” After getting debt
consolidation loans, some consumers have
received a letter from their lenders stating
the monthly mortgage payment will be higher
than the amount originally quoted. Or may
be told they failed to maintain required
property insurance and the lender is buying
more costly insurance at the borrower’s
expense.
Out of desperation, Texas homeowners that
have had difficulty paying their debt consolidation
loans have literally given away their homes
to mortgage lenders. Because of threats
to foreclose and take their homes by their
mortgage lenders, some homeowners have agreed
to refinance offers from other lenders only
to find they signed the deed to their property
to the new mortgage lender. Once having
the deed to your property, the lenders may
borrow against it or sell it without your
consent. Plus the lender may treat you as
a tenant and if your mortgage payment is
late, they could have you evicted from your
home.
The best solution to avoid debt consolidation
lending schemes or the potential foreclosure
of your property is not to get a home equity
loan. If you have troublesome debt, instead
of having a debt consolidation loan tie
up the equity in your home, one option is
to enlist in a debt management plan offered
through your local Consumer Credit Counseling
organization. But if you need to reduce
a lot more than just your debt’s high
interest rates, Debt Free League offers
a more aggressive, debt settlement service.
The Debt Free League Debt Liquidation Program
is an ideal choice for consumers and small
business owners whose incomes were impaired
because of a legitimate financial hardship.
If you’re drowning in debt, in contrast
to credit counseling, Debt Free League’s
debt settlement services may allow you to
pay off your debt with a lower, more manageable
monthly payment. The magnificent savings
achieved by their debt negotiation professionals
generally exceed 50% of the consumer’s
or small business owner’s total debt
balance. Not a bad choice if you’ve
been scammed by a bad debt consolidation
loan that may endanger you into foreclosure,
or if you’re a victim of a financial
hardship, such as a medical illness or unemployment.
About Debt Free League
Debt Free League is a Debt Settlement organization
that works on behalf of consumers and small
businesses to negotiate the settlement of
unsecured debt. Working through key relationships
with creditors, collection agencies, and
collection attorneys throughout the country,
their Debt Liquidation Program has produced
substantial unsecured debt reductions and
a variety of credit improvement benefits
for many clients.
For more information, Contact
Debt Free League’s Web site at www.debtfreeleague.com
Contact:
Sales
sales@DebtFreeLeague.com
(800) 213-9968
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