Indianapolis Recorder, Indianapolis, Marion County, 19 July 2002 — Page 9

FRIDAY, JULY 19,2002

THE INDIANAPOLIS RECORDER

PAGEA9

Econ 101 The Pearls Investment Klub, the second Investment club of Alpha Kappa Alpha Sorority’s Alpha Mu Omega Chapter, was formed on April 28,2001, and after a year of operation is proud to have started investing in the stock market. The Pearls Investment Klub officers and partners are: (sitting, I to r) Pamela Hatcher, Heloise Miller-Archie, Vice President Janice White, President Frankie Cooper, Assnt. Treasurer Elinor Nelson, Assnt. Secretary Larnell Burks-Bagley, Treasurer Angie Artis; (standing, I to r) Vivian Watts, Mary Radford, Nina Bishop, Rose Murphy, Bruceil Mays, Stacla Gray, Veronica S. Powell, Lisa Bennett. Other partners not shown are Secretary Grace R. Dowe, Sheila Bonds, Nettie Dixon, Shirley Lynch, Willa Pope, Natalie Summers-Henson and Mary L. Taylor.

BAD LOANS Continued from A8

What Makes ? Loan Predatory? Predatory lending refers to unfair practices by the issuers of “sub-prime” mort-gages-mortgages with interest rates ratcheted higher, ostensibly to compensate for borrowers’ less-than-perfect credit histories. Here are some characteristics of predatory loans: Excessive Fees Borrowers in predatory loans are routinely charged broker or lender fees of nearly 8 percent of the loan amount, compared to the average 1-2 percent assessed by banks to originate other home loans. Steering Charging high, sub-prime interest (9-20 percent) to borrowers who have good enough credit to qualify for prime-rate loans (8-9 percent). A recent study by the Center for Community Change showed that Black and Hispanic homeowners are more likely to have subprime loans than whites with similar incomes. Making Loans Without Regard to the Borrower’s Ability to Pay Some predatory lenders make loans based solely on a homeowner’s equity, even when it is obvious that the homeowner will not be able to afford the payments. For mortgage brokers, the motivation to engage in this kind of practice is a desire for the fees generated by the loan. For some lenders, especially when there is significant equity in a home, the motivation is the ultimate foreclosure on the house which can then be resold for a profit. Prepayment Penalties More than two-thirds of sub-prime loans have prepayment penalties, compared to less than 2 percent of conventional prime loans. The penalties come due when a borrower pays off their loan early, typically through refinancing or a sale of the house. Prepayment penalties on sub-prime loans can have the effect of keeping people

tied to a lender which overcharged them, sometimes on a adjustable rate loan, and prevent people who establish and maintain improved credit from moving to a better loan. Adjustable Rate Mortgages Loans with rates not tied to an economic indicator, and may include an artificially low teaser rate to lure borrowers. Home Improvement Scams Some home improvement contractors deliberately market to lower income neighborhoods where homes are in most need of repairs, but the owners are unable to directly pay for the service. The contractor arranges loans that have the lender directly paying to the contractor, which means that the homeowner has no control over the quality of the work. Single Premium Credit Insurance Credit insurance is insurance linked to a specific debt or loan which will pay off that particular debt if the borrower loses the ability to pay because of illness, death or unemployment. With “single premium” policies, the credit insurance is paid in one lump sum payment,

which is then financed into the loan. Typically, single premium credit insurance policies cost four to five times as much as monthlypaid credit insurance and over 10 times as much as term life insurance policies. Balloon Payments Mortgages with balloon payments are arranged so that after making a certain number of regular payments, the borrower must pay off the remaining loan balance in its entirety, in one “balloon payment.” Balloon mortgages, especially when combined with high interest rates, make it more difficult for borrowers to build equity in their home. Loan Flipping Flipping is a practice in which a lender, often through high-pressure or deceptive sales tactics, encourages repeated refinancing by existing customers and tacks on thousands of dollars in additional fees or other charges each time. Some lenders will intentionally start borrowers with a loan at a higher interest rate, so that the lender can then refinance the loan to a slightly lower rate and charge additional fees to the borrower. Sources: ACORN, Organization for a New Eastside

Family Dentistry

Quality care at prices you and your family can afford. That’s the tradition Dr. Smith started over 20 years ago. Now you and your loved ones can have it too. Plus, for every new patient we receive, we will donate *5.00 to the Julian Center! We help your smile last a lifetime! •Gentle cleaning 6 fillings • Tooth whitening •Downs & bridges • Bonding & veneers •Single visit root canals •Emergencies always welcome •Nonsurgkal gum & TMJ treatment •Oral Sedation • Restorative care • Oral Surgery We help your smile last a lifetime •Intraoral camera shows your smle close-up • Emergencies always seen promptly •Most Insurance accepted & fled •Medicaid accepted • Visa. MasterCard. Discover & American Express welcome Hamflcapped-accessMe free parking

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Dentistry

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COSMO KNIGHTSSCHOURSHIP FUND INC.

The 28th Annual Junior/Amateur Scholarship Golf Tournament July 26th, 27th & 28th The Cosmo Knights Scholarship Fund, Incorporation’s purpose is to assist Central Indiana students the opportunity to further their education by awarding scholarships that will help them attend colleges or universities of their choice. For more information please call (317) 925-6275

A SURPRISE AT EVERY TURN • ART. SCIENCE AND CULTURE • EXPLORE THE PAST, PRESENT AND FUTURE • SUNDAY SERENADES 4 x ^ L.S. AYRES TEA ROOM • 9Z ORIGINAL SCULPTURES • TWO-STORY GIR SHOP • THE IMAX EXPERIENCE* • ICE CREAM CLOWNS >

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This month: "Dinosaur Discoveries" Saturday, July 20 • 10 a.m. to 3 p.m. | IncludeAWitji museum admission. Free for museum members.

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Watch children assemble a dinosaur in the museum's grand lobby. Enjoy face painting, a Chinese shadow puppet workshop, entertainer Matt Roush and more!

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Broadcast Sponsor: WISH-TV

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650 West Washington Street • 317.232.1637

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