Mortgage Lender Scams
You probably have heard the term, 'Predatory Lending,' and wondered how this could or does apply to you.
Well, when you are shopping around to secure the best loan for that great home you so very much to own, that is when the unsavory practice of predatory lending is something which you want to avoid.
In short, predatory lending is a scam employed by mortgage lenders looking to charge higher interest rates to persons with whom they feel they can get away with it. Hence the most common groups targeted by these unprincipled lenders are: senior citizens, low-income individuals and those persons with serious credit problems.
Often, persons from these aforementioned groups will be uneducated as to the ways of the real estate lending market, not speak or understand English, or simply feel they have no other recourse for securing the capital for which they are desperately seeking.
Identified by the Federal Trade Commission (FTC,) the following are five of the major types of home equity fraud currently being committed:
1) Equity stripping, which means a loan that rather than being based on a borrower's ability to repay the loan is being hinged upon the equity they can document is in their possession.
2) Loan flipping refers to money that is lent on a short, three to six month basis. Thus upon each new term additional fees and points are assessed to the total amount owed.
3) Credit insurance is the assurance to a lender that his | her money will be repaid. While the lender will tell it is mandatory it is in fact costly and unnecessary.
4) Bait & switch, one of the oldest tricks in the book, occurs when lenders advertise one rate and then when you come in they present you with an entirely different offer. Plus, such swapped out offers are often accompanied by an inordinate amount of pressure placed upon you to sign.
5) Deceptive loan servicing is a vague form of billing whereby the borrower is uncertain as to how much they owe and what their present balance is.
As a method of safeguarding yourself against such aforementioned fraudulent activities, it is suggested that you follow the basic guidelines:
Simplest suggestion is that you should NOT sign the offer, unless completely convinced it is above board. Yet, as this is often easier said than done, additional suggestions are that you do NOT sign under the following conditions: presented with newly revised paperwork that requires you to make payments you can not afford, enter into an agreement whereby the terms have dramatically changed, are faced with undue pressure being placed upon you by the lender and | or you do not fully understand the terms and policies of the agreement.
When you believe you have encountered what is an unscrupulous mortgage lender, best to contact either the FTC or the regulatory consumer business agency for your city or state.
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