Georgia and federal laws make many predatory lending practices illegal and provide a means to punish and recover damages from those who violate the law. If you feel that you have fallen victim to loan fraud, an experienced Atlanta attorney should be consulted to protect your legal rights.

The federal government created the Truth in Lending Act (TILA) to require creditors to disclose the true cost of consumer credit so that the consumer can make informed choices before committing to any transaction. The amount and types of disclosure required depend on whether the loan is closed or open in nature, and as a result, an experienced attorney should be consulted to determine if a particular practice violates federal law. However, a creditor is generally required to make disclosures in written form that are clear and conspicuous. The consumer must also be provided with a copy of the written disclosures.

Specifically, for closed-end credit plans, a creditor must generally disclose the identity of the creditor, the amount financed, a brief description of the amount, itemization of the amount, the APR and a brief description, variable rates, the total payment after all scheduled payments have been made, late payment charges, and certain security interest charges. For open-end credit plans, different requirements may exist for the different stages of the overall transaction. The creditor may be required to disclose such factors as the finance charge, other charges, security interests, a statement of billing rights, and certain home equity information. Many other potential disclosures may be required as well.

TILA also offers victims a means to recover damages in many cases. Victims may recover the actual harm they sustained as well as statutory damages. If a court finds a creditor in violation of TILA, it generally must award the statutory penalty which is twice the finance charge. Additionally, if a creditor has committed fraud upon a group of consumers, there may exist grounds for a class action lawsuit against the creditor or parties responsible for the consumer fraud.

Georgia also instituted several laws to protect consumers. The Georgia Fair Lending Act was adopted to prohibit abusive home loan practices and to provide penalties for those who engage in such practices. Prohibited practices under the Act include encouraging a borrower to default, charging late payments unless certain elements have been met, and charging fees for transmitting that a balance is due in some cases. The Act also makes the practice of "flipping" generally unlawful. Georgia law defines "flipping" as the consummation of a high-cost home loan to a borrower that refinances an existing home loan that was consummated within the prior five years when the new loan does not provide a reasonable and tangible benefit to the borrower. High-cost home loans are also subject to limitations, and prohibited acts include failing to review a buyer's ability to pay, increased interest rates after default, encouraging default, lack of counseling by a third-party nonprofit organization, and failing to disclose certain facts or documents.

Creditors in violation of the Georgia Fair Lending Act are guilty of a misdemeanor and may also be held liable in civil court. Victims may recover actual damages they sustained, and statutory damages may also be recovered in some cases. Statutory damages are measured as being two times the interest paid under the loan. Georgia law also provides for punitive damages when the defendant's actions showed willful misconduct, malice, fraud, wantonness, or oppression. A court may also grant an injunction or other equitable relief if proper.

Georgia has also passed laws protecting consumers from residential mortgage fraud. If a person knowingly makes any misrepresentation or omission during the lending process with the intent that the information will be relied upon by a lender, borrower, or other party, that person has committed mortgage fraud under Georgia law. The crime of mortgage fraud is a felony and carries with it a sentence of one to ten years as well as a fine up to $5,000. If a pattern of residential mortgage fraud is found, conviction will result in a sentence of three to 20 years and a fine up to $100,000. Residential mortgage fraud laws in Georgia do not explicitly provide for a civil remedy; however, fraud which results in damages generally allows the injured party to bring suit against the offender. In an action for fraud, the plaintiff may seek to recover the actual loss he or she sustained due to the fraud. A plaintiff may also seek punitive damages.

The information provided above is a very general summary of the law regarding this particular legal issue at the time this text was prepared. Because this analysis is subject to change depending upon recent cases and developments, you should not rely on this summary as legal advice. As with any important legal question, you should always consult with a lawyer licensed to practice in your jurisdiction. Our lawyers are licensed to practice in all Georgia state and federal courts.