Critics tie 'predatory' lending practices to a rising foreclosure rate in urban America.
A short walk through low-income neighborhoods in major US cities yields a distressing countertrend to today's home-ownership boom.
"For sale" signs proliferate - testaments to a sudden jump in foreclosures in the nation's inner cities. The trend is seen from Chicago to Miami to Philadelphia, a city where the number of families who've lost their homes because they couldn't make their mortgage payments has doubled since 1997.
A number of explanations are possible, including looser lending standards in recent years and job instability among inner-city residents.
But some consumer advocates are casting blame in another direction: mortgage lenders who target unsophisticated borrowers and negotiate deals with hidden costs and high fees.
Concern about "predatory lending" is particularly heightened now, as low interest rates prompt many homeowners to refinance their mortgages. States and cities - most recently Philadelphia - are taking steps to protect consumers from such lenders, in an effort to help poor and working-class residents keep their foothold in America's middle class.
The crackdowns on mortgage lenders, which affect firms that specialize in loans to people with poor credit as well as the industry at large, are intended to protect people like the Thorpes, who own a two-story home in Philadelphia's Olney neighborhood.
Trouble at the Thorpes'
When the couple chose to refinance the mortgage on their $35,000 house last year, they thought they'd get lower interest payments and fewer bills after consolidating their debts. What they ended up with were phantom fees, including a $2,700 service charge and a $1,400 life insurance policy they didn't want. They now owe more money than their house is worth, and are struggling to avoid foreclosure.
"I had no idea they would charge those kinds of fees," says Judy Thorpe. "You're in there with three people saying different things, and at no point do they give you the chance to look over the contract."