In response to a recent report on increasing foreclosures, the Ohio Department of Commerce’s Office of Consumer Affairs is reminding consumers to “Borrow Smart.”

“Borrow Smart” is a campaign that encourages Ohioans to be aware of abusive lending practices and to “borrow smart” by only signing mortgage loan documents whose terms they understand, agree with, and are confident that they can repay.  Today’s reminder is in response to published reports on a Policy Matter Ohio study showing a 155 percent increase in property foreclosures in Ohio since 1994.

“The home is the biggest purchase most consumers will ever make, and the asset consumers can least afford to lose,” said Superintendent of Financial Institutions F. Scott O’Donnell.  “Making wise choices during the lending process can greatly decrease a consumer’s chances of foreclosure.”

O’Donnell said it is vital for borrowers to understand the amount that they are borrowing and to assess their ability to repay the loan in addition to other debts that they have.  He reminded consumers that failure to pay debt secured by the home (e.g., a second mortgage) can result in the loss of the home.  He said borrowers should understand: 

·         how much is being borrowed

·         the annual percentage rate being charged, which includes interest and other finance charges

·         whether the loan has a variable rate or other terms that may cause the monthly payment to increase

·         how much the monthly payments will be, including taxes and insurance

·         any points (a point is 1 percent of the loan amount) being charged

·         all fees associated with the loan, including any prepayment penalty

·         if there is a balloon payment to be made at the end of the loan

·         whether the loan terms fit one’s needs and are as favorable as one’s credit history allows

The Office of Consumer Affairs has two brochures to assist Ohio borrowers.  They are titled:  “Predatory Lending: Tricks of the Trade and How to Recognize Them” and “Don’t Become a Victim: A Guide to Predatory Lending.”  The brochures can be found at www.com.state.oh.us or by leaving a request on the toll-free Consumer Hotline at 1-866-278-0003.  The Web site also provides links to useful information from other organizations. 

In addition, Ohioans can call the Consumer Hotline to initiate complaints when they believe that they have been victimized by abusive lending practices.  The office can also act as a referral service to organizations that can assist the borrower.  

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