Posted on: 08th Jan, 2009 05:45 pm
buyers are approved for a loan which would carry a 44% debt ratio (48% considering the fact that the loan officer incorrectly put a debt on the application as a credit rather than an debit); they are approved at $198,00 in may but are interested in a house costing $214,900; in june they are approved for $214,900 with no increase in income occurring; they go to settlement for a 30 year fixed rate first time home buyers mortgage (they are 24 and 25) mortgage; the buyers and sellers sign all of the documents and sit there a while; the loan officer/title person comes in and says the sellers have signed everything they need to (including a relinquished property contract assignment) and they can leave. after the sellers leave, the buyers are told that the loan didn't go through. but, lo and behold, they can get them another deal. after 3 more hours, they are given two loans. one an 80% mortgage and the other a 20% home equity balloon loan. the settlement sheet the sellers signed differs from the buyers (written proof). does this contitute predatory lending and misinforming clients by the loan officer and realtor representing the buyers? when the sellers signed over the property by way of the relinquished property agreement to a "middleman", not having one clue that the loan papers they just signed didn't go through, was this predatory lending. is giving a home equity loan on a home someone doesn't yet own legal? does misinforming the buyers constitute predatory lending?
Hi suniskye!
Welcome to forums!
Predatory lending is a used to describe the malpractices of some lenders. As far as I know, there are no legal definitions for predatory lending, however, there are laws against many of the specific practices which are considered as predatory. It is also used for specific illegal activities in the loan industry. As far as the situation mentioned above, I think, it will be better if the borrowers would consider consulting an attorney who is an expert in dealing with mortgage fraud issues.
Feel free to ask if you have further queries.
Sussane
Welcome to forums!
Predatory lending is a used to describe the malpractices of some lenders. As far as I know, there are no legal definitions for predatory lending, however, there are laws against many of the specific practices which are considered as predatory. It is also used for specific illegal activities in the loan industry. As far as the situation mentioned above, I think, it will be better if the borrowers would consider consulting an attorney who is an expert in dealing with mortgage fraud issues.
Feel free to ask if you have further queries.
Sussane
Thanks. I'm taking them to see a bankruptcy lawyer on Wednesday and a litigation attorney is going to review their records. I am trying to get it altogether and in some kind of order for him because it is a free review. The lender that they had has lawsuits pending for the same type of thing but I'm more interested in the principle ... criminally, not monetarily because it is just wrong what has been done to so many people. Subprime loans should have been regulated more thoroughly. If our legislators would have had some regulating in place perhaps we would not find ourselves in this situation and perhaps greedy lenders and loan officers would have thought twice about putting people in home's they couldn't afford. Of course the borrowers signed off but in the instance above they were young, naive and inexperienced as were many others who this has happened to. I will be sending a copy of their documents to the proper government agencies too. The funny part about this is that as soon as the kids told me what occurred at their settlement I got this horrible gut feeling about it and I actually called the loan officer and realtor way back them, 2 years ago, to let them know what I thought of them for doing this and for putting them in a house they couldn't afford. We have been helping with their payments on and off for the entire time they have been in that house. Finally, we see a light at the end of the tunnel by way of walking away via bankruptcy. Unfortunately their credit will be ruined but they are young enough to have learned a lesson so that their future will be better.
here is a lesson for all. anytime you are told something that is "too good to be true," then you can count on it being a falsehood. a home purchase is the largest purchase any of us will make in our lifetimes, and we need to tread carefully.
frankly, for sellers of a home to be absent when their buyers are signing loan documents isn't anything out of the ordinary. nevertheless, if anyone, in the process of buying a home, is told that their loan didn't go through but that there was another way to do the financing at the closing table, there has to be a healthy skepticism - a non belief - a lack of acceptance. i realize that 24 and 25 year olds are not necessarily world-savvy, but they ought to be sophisticated enough to recognize the difference between normal and abnormal, between straightforward and shady, etc. and, yes, i recognize that there are folk in their 50s and 60s who would have the same lack of knowledge and understanding and do the very same thing as these "kids" did.
i didn't quite understand the concept of the "middleman" in the original post, but i suppose that's not important now.
what is vitally important is for us to ensure that we all obtain as much knowledge as possible in the home-buying/mortgage process; and that we share that knowledge wherever appropriate; and that we encourage others to learn as much as they can as well.
this forum provides us with a marvellous opportunity to encourage, educate and support each other. i pray that no one who posts regularly is taking it lightly, and that all will be sure that advice given is rational, understandable and reasonable.
frankly, for sellers of a home to be absent when their buyers are signing loan documents isn't anything out of the ordinary. nevertheless, if anyone, in the process of buying a home, is told that their loan didn't go through but that there was another way to do the financing at the closing table, there has to be a healthy skepticism - a non belief - a lack of acceptance. i realize that 24 and 25 year olds are not necessarily world-savvy, but they ought to be sophisticated enough to recognize the difference between normal and abnormal, between straightforward and shady, etc. and, yes, i recognize that there are folk in their 50s and 60s who would have the same lack of knowledge and understanding and do the very same thing as these "kids" did.
i didn't quite understand the concept of the "middleman" in the original post, but i suppose that's not important now.
what is vitally important is for us to ensure that we all obtain as much knowledge as possible in the home-buying/mortgage process; and that we share that knowledge wherever appropriate; and that we encourage others to learn as much as they can as well.
this forum provides us with a marvellous opportunity to encourage, educate and support each other. i pray that no one who posts regularly is taking it lightly, and that all will be sure that advice given is rational, understandable and reasonable.
Thanks George. I learned some lessons as a parent here too. I should have insisted to be there or at the very least, hired an attorney to assist them. This scenario is playing out in more homes than we would ever realize and it is really unfortunate. In the longrun, they signed so now they must learn a lesson about wanting something so badly that they do not use their brains to figure out whether it is something within the realm of their finances. I feel that from here on out this type of lending will not be occurring anymore. There is a big mess that needs to be cleaned up in the wake of subprime lending. Alot of people are learning lessons along the way. I do not feel anyone is ever too old to learn a lesson. At least we have our health and our family and they are lucky enough to have two sets of parents with open doors and extra bedrooms although they have chosen to rent instead. There are many who do not have anywhere to go. I appreciate the advice and this forum is extremely helping in understanding a process to not many people know.