Future home owners beware. That was the message Mildred Wilkins, president of the Indiana-based Home Ownership Matters, LLC consumer advocacy organization had to tell members of the Covington Board of Realtors Monday afternoon.

Wilkins, an Andalusia native, was at the meeting to discuss predatory lending practices - a growing problem in the United States - with Realtors, and how they can help their clients avoid being taken advantage of by predatory lenders.

"There is no widespread definition of predatory lending," Wilkins said. "It's very similar to the 'loan shark' practices from a couple of years ago. It's actually a fairly new phrase in real estate that's becoming more widely known. It's becoming a tremendous problem."

Predatory lending practices aren't always easy to spot - especially with the onslaught of late-night television commercials, magazine advertisements and bulk mailer brochures proclaiming to "guarantee you up to X amount of dollars today," Wilkins said, "but with a closer look and knowing what to look for, you can spot them.

"Generally, predatory loans are loans that are not in the best interest of the consumer," she added. "And they strike victims from all areas. They play on people's sensitivities."

Debra Donaldson, broker/ owner of Coldwell Banker – First Choice Realty, said she agreed with some of Wilkins points.

"I think the things she had to say about predatory lenders - some of them were very valid points, and we do have a few in this area," Donaldson said. "I've noticed their brokerage fees are higher than traditional lenders like SouthTrust and Regions Banks."

"I thought she was very knowledgeable," said Norma Williams, broker/owner of United Country – Heritage Realty. "She (Wilkins) addressed several things that were of interest to us about guiding people better to avoid being taken advantage of. She helped us to understand how we can be more insistent that our clients go to ethical lending institutions instead of places that are soliciting business by what might not be the best practices."

But, what is often the result of predatory lending - large amounts of foreclosed properties - isn't necessarily the case in Covington County.

"Typically, with predatory lending, there are high rates of foreclosures," Wilkins said. "The buyer gets lured into a loan with a 'guarantee of loan approval,' low payments, and quick closing. What the borrower isn't seeing are the hidden fees such as prepaid single premium life insurance, prepayment penalties, excessive fees, etc.

"What happens is, the borrower will have all of these extra fees tacked onto their payment, and what was said to be a $400 per month payment, actually turns out to be a $800 per month payment. The person then isn't able to make their loan payment and their house is foreclosed on."

"Yes, there are predatory lenders out there and working in our area," Donaldson said. "But, 9 out of 10 times, the foreclosures in this area are because someone has lost their job - not the fees.

"That's not to take away from what she said about being wary of predatory lenders though," Donaldson continued. "There were some very important things to watch out for. Ask you lender specific questions, and never take out a loan from someone calling you over the telephone."

It's those type of telephone loans that are a big problem, Wilkins said.

"Often, a person will get a call from someone saying that they guarantee approval for a home improvement loan for up to say $5,000. That person agrees to the loan and then finds out there are all of the hidden costs. That $5,000 loan could wind up costing $10,000 - or your house - because it eats the home equity you've established in your home."

Above all, the message Wilkins brought with her was to be careful.

"Realtors need to be educated, and so does the general public," she Wilkins said. "We believe that by providing consumers with the proper education - we can combat this growing problem. If people have the information they need, they can avoid being taking advantage of."

Donaldson and Williams both agreed.

"She really helped us know how to educate our customers," Williams said.

"Always ask questions of lenders," Donaldson said. "When in doubt, always go to a reputable broker who can guide you in the right direction."

"People need to ask these lenders about the hidden costs, what the fine print says, and then - tell them you're going to let someone else you know look over the contract before you sign anything. A lawyer, banker, broker - anyone with knowledge in the field can help prevent this from happening to you," Wilkins said.