NY probes short-term, high-interest secured loans
ALBANY, N.Y. (AP) — New York regulators have begun investigating short-term, high-interest loans secured by borrowers' homes or other real estate to determine if they violate state laws against predatory lending.
The Department of Financial Services says Tuesday it has issued subpoenas for information from nine companies involved in so-called "hard money lending."
Under the deals, a borrower's ability to repay typically is unexamined and loans may be structured with an expectation of foreclosing on property.
Superintendent Ben Lawsky says such "loan to own" schemes are unconscionable.
Regulators are investigating whether the companies intentionally set onerous terms with high interest rates, large upfront fees and big balloon payments.
They are also examining complaints some borrowers are required to sign deeds when obtaining loans, permitting lenders to take property when one payment is missed.