real estate law center: what is predatory lending?
DESCRIPTION
Real Estate Law Center reviews predatory lending, and 9 signs you might be taken by predatory lending fraud.TRANSCRIPT
Real Estate Law Center 877-694-3313 www.lenderlawlitigation.com
• What is Predatory Mortgage Lending?
What is Predatory Lending?
Real Estate Law Center 877-694-3313 www.lenderlawlitigation.com
• Real Estate Law Center Reviews some tips and solutions
What is Predatory Lending?
Real Estate Law Center 877-694-3313 www.lenderlawlitigation.com
• Predatory mortgage lending:– “Imposing unfair and abusive loan terms on
borrowers.“• According to the office of inspector general
of the FDIC
What is Predatory Lending?
Real Estate Law Center 877-694-3313 www.lenderlawlitigation.com
• But what does predatory lending look like in the real world?
What is Predatory Lending?
Real Estate Law Center 877-694-3313 www.lenderlawlitigation.com
• There are many lending practices which are abusive and have been labeled as "predatory lending."
What is Predatory Lending?
Real Estate Law Center 877-694-3313 www.lenderlawlitigation.com
• Here are 9 signs of predatory mortgage lending practices:
What is Predatory Lending?
Real Estate Law Center 877-694-3313 www.lenderlawlitigation.com
• Brokers That Charge Higher Interest Rates– Charging higher interest rates can be a
predatory lending practice.
What is Predatory Lending?
Real Estate Law Center 877-694-3313 www.lenderlawlitigation.com
– Simply put: A broker can make more money if they increase the interest rate beyond the mortgage lender’s real interest rate charge.
– To combat this, a good question to ask a broker is will they be paid a “yield-spread premium,” or basically a financial reward lenders pay for an inflated interest rate.
What is Predatory Lending?
Real Estate Law Center 877-694-3313 www.lenderlawlitigation.com
• Unnecessarily Large Fees– Look out for large fees—especially when
there is no need for them.
What is Predatory Lending?
Real Estate Law Center 877-694-3313 www.lenderlawlitigation.com
– The lender charges “points” or a small percentage of the loan as a fee.
– Generally these range from three points or 3% of the loan amount or less, including necessities such as appraisal and title insurance.
– Be sure to get your credit score before hand and find out what other lenders charge in your area for comparisons.
What is Predatory Lending?
Real Estate Law Center 877-694-3313 www.lenderlawlitigation.com
• Prepayment Penalty– Requiring a fee or paying a penalty for paying
the loan off early could be a sign of predatory mortgage lending practices.
– This stipulates that the borrower agrees to pay a large fee before refinancing.
– Note that the penalty period can last several years and this can cost thousands of dollars or more.
What is Predatory Lending?
Real Estate Law Center 877-694-3313 www.lenderlawlitigation.com
• Ads Saying Bad Credit is Unimportant– Avoid lenders or companies who say that bad
credit unimportant in their ads. – Also be especially wary of lenders or brokers
who make contact directly, or those who try to rush a decisions or requires immediate responses.
What is Predatory Lending?
Real Estate Law Center 877-694-3313 www.lenderlawlitigation.com
• Targeting Minority Groups– Also unfortunately, predatory lenders
sometimes target older victims such as senior citizens or minorities in order to force unnecessarily expensive loans.
What is Predatory Lending?
Real Estate Law Center 877-694-3313 www.lenderlawlitigation.com
• Balloon Adjustable Interest Rates– Adjustable rate loans that can rise
significantly should be avoided. – Usually, a predatory loan balloons or adjusts
one way—higher. – Be sure to understand exactly all the options,
including what could happen in the “worst-case scenario” for any future payments.
– And don’t count on a future refinance to rescue you from an unaffordable loan.
What is Predatory Lending?
Real Estate Law Center 877-694-3313 www.lenderlawlitigation.com
• Resolving Problems with Future Refinancing– Beware of the promise by a lender to correct a
bad loan or deal later during a another refinancing down the road.
– If a loan is not good now, just hold off until later.
– Refinancing frequently can be a big financial drain too, and results in additional fees.
What is Predatory Lending?
Real Estate Law Center 877-694-3313 www.lenderlawlitigation.com
• Not Including Insurance, Taxes– Confirm that monthly mortgage payments
include additional costs, such as property taxes and insurance.
– Also be sure that the lender has created an escrow account for these costs.
– An unscrupulous lender can make mortgage payments seem artificially low by not including all extra required costs.
What is Predatory Lending?
Real Estate Law Center 877-694-3313 www.lenderlawlitigation.com
• Real Estate Law Center
What is Predatory Lending?