Posted on: 04th Feb, 2006 02:34 am
Predatory lending has affected the mortgage industry by charging borrowers with higher interest and monthly payments. The following steps taken by your lender indicates that he is into predatory lending.
Some do's and don'ts to prevent yourself from being misled by a predatory lender:
- He gives you a false explanation of the kind of mortgage you will be getting.
- The lender asks you to provide false details on the loan document regarding your income level.
- He may repeatedly ask you to apply for loan limits that you cannot repay or an amount higher than you actually require.
- The lender asks you to sign blank forms and states that he will be signing them later on.
- Your lender allows you to sign a mortgage note with particular terms and then change the terms and conditions without reasonable explanations.
- He makes you sign the legal documents in a hurry.
- He may not provide copies of the documents you have signed for the loan.
- The lender forces you to make large monthly payments which may lead you into financial distress.
Some do's and don'ts to prevent yourself from being misled by a predatory lender:
- Even if the lender has approved your loan, check out with other lenders whether you actually qualify for the loan.
- Do not sign loan documents and forms having blank lines or spaces.
- See that the lender has signed all relevant documents along with the proper dates.
- Watch out for the fees that you are being charged along with the rate and points. Enquire about the fees if you cannot make out why you are paying such fees.
- Check out for prepayment penalty charged by lenders in case you refinance your first mortgage or sell off your home prior to the termination of the loan period.
- Have a clear understanding of mortgage concepts and terminology. Consult the lender or anyone acquainted with those terms.
Predatory lenders are often ruining the image of the industry and forcing the borrowers into trouble with their misleading guidance. Some practices conducted by them include -
Whenever you are dealing with a lender it is better to take suggestions from persons who are having previous experience and check with other lenders to avoid the trap.
Regards,
Blue
- They bring too many borrowers under high rate of interest and force them to pay higher fees although the borrower's credit may be at not that level of risk.
- There are some of them offering loans on the basis of borrower's home equity only without judging the borrower's ability to repay.
- Some of the predatory lenders grant loans more than their home's value and traps the borrowers for an extended period.
- Prepayment penalties are charged with more than 60% of the sub-prime loans.
Whenever you are dealing with a lender it is better to take suggestions from persons who are having previous experience and check with other lenders to avoid the trap.
Regards,
Blue
This is alarming to see such practices by some lenders. :shock:
Are the government organizations taking any steps towards these kind of illegal practices by the predatory lenders as we as borrowers often don't have adequate knowledge so as to understand that we are being cheated.
Hi Jane,
It is quite obvious that borrowers may not be aware of the details associated with a loan and that's why we recommend always checking with different lenders and experienced persons whom you believe.
This will lower the risk of falling prey to these predatory lenders. Government tries to take measures against wrong practices but as a possible victim you can help yourself to avoid such trouble.
As per government is concerned, the FTC (Federal Trade Commission) has published some free publications to make the homeowners and potential buyers aware of these practices.
The FTC is always monitoring the industry and takes adequate law enforcement action work to protect consumers from such wrong practices.
James
It is quite obvious that borrowers may not be aware of the details associated with a loan and that's why we recommend always checking with different lenders and experienced persons whom you believe.
This will lower the risk of falling prey to these predatory lenders. Government tries to take measures against wrong practices but as a possible victim you can help yourself to avoid such trouble.
As per government is concerned, the FTC (Federal Trade Commission) has published some free publications to make the homeowners and potential buyers aware of these practices.
The FTC is always monitoring the industry and takes adequate law enforcement action work to protect consumers from such wrong practices.
James