Many people across the country lose their homes and investments because of predatory lending. The U.S. Department of Housing and Urban Development (HUD) provides 11 Tips for consumers to protect themselves from loan fraud.
What happens in Predatory Lending?
- Properties are sold for much more than they are worth using false appraisals.
- Borrowers are encouraged to lie about their income, expenses, or down payment amounts in order to get a mortgage.
- Lenders finance more money than a borrower can afford to repay.
- High interest rates are charged to borrowers based on their ethnicity and not on their credit history.
- Fees are charged for unnecessary or nonexistent products/services.
- Borrowers are pressured to accept higher-risk loans that are not matching their goals (ex. balloon loans, interest only payments, and steep pre-payment penalties).
- Vulnerable borrowers are targeted to cash-out refinances offers when they know borrowers are in need of cash due to medical, unemployment or debt problems.
- Homeowner's equity is reduced from by convincing them to refinance again and again when there is no benefit to do so.
- High pressure sales tactics are used to sell home improvements and finance them at high interest rates.
For more information download HUD's Brochure - Don't Be a Victim of Loan Fraud. (PDF File - 51 KB) or visit Crye-Leike's essential reference information for real estate buyers. If you are buying in the Southern US and interested in getting Pre-Approved for a mortgage, please contact us.
Comments(0)