Councilmember Michael Johnson's
Arizona Informant Column
January 24, 2005

Be Aware of Predatory Lending

The American dream for most people is to own their own home. Many residents work more than one job and sacrifice their leisure time to make their dream of owning a home come true.

Unfortunately, we often hear of families who become victims of predatory lending and ultimately have to foreclose on their dream home because they signed a contract they didn’t understand.

I’d like to inform residents that the city’s Neighborhood Services Department, in partnership with Phoenix Neighborhood Housing Services, is offering a free class on how to protect yourself from predatory tactics that put homeowners and homebuyers at risk.

In addition, the Phoenix Urban League also offers free seminars to first-time homebuyers on a regular basis and educates people on measures to take to avoid becoming a victim of predatory lending.

Some tips to consider:

Remember to do your homework. If you meet with a lender and the contract they are offering you is just too good to be true, chances are that you’re being set up.

Before meeting with any lender, review your credit report. Generally speaking, a good credit score is 600 points or higher. There are some lending programs that will qualify customers at this score, provided there are no outstanding collections, charge offs, judgments, automobile repossessions, etc.

If you have items on your credit report, please take care of them, because lenders will be hesitant to work with you.

Also, ask lenders if they have first-time homebuyer programs. Many of these programs offer down payment closing costs. Usually, if one qualifies for this program, you can get the market rate and be able to afford monthly mortgage payments.

Finally, if a lender asks you to sign blank documents, please don’t do it. It’s amazing how many people are too trusting of lenders who are just waiting to take advantage of them.

Maricopa County has one of the highest foreclosure rates in the state. Don’t contribute to this blemish by signing blank or vague documents.

As noted, both the city’s Neighborhood Services Department and the Phoenix Urban League provide classes on predatory lending.

The city’s free two-hour class is Wednesday, Jan. 26 at the Sunnyslope Community Center , 802 E. Vogel, and will be held from 5 to 7 p.m. You are encouraged to register in advance by calling 602-258-1659.

The Phoenix Urban League’s next First-time Homebuyer Seminar is on Saturday Jan. 22 from 10 a.m. to 2 p.m. at the League’s office, 1402 S. 7 th Ave.

Urban League classes also will be offered Tuesday, Feb. 15 from 6:30 to 9 p.m. and Saturday, Feb. 19.

These seminars, which the Urban League has been offering for eight years now, are free to the public, and participants are encouraged to register by calling by 602-254-5611.

So do your homework and avoid becoming a victim.

Michael Johnson is a Phoenix City Councilmember who represents District 8. His office can be reached at 602-262-7493 or at michael.johnson@phoenix.gov via e-mail.