Recognizing Predatory Mortgage Lenders

By
Real Estate Broker/Owner with 1 Month Realty 49855-090

 

 

Recognizing Predatory Lenders

Recognizing Predatory Mortgage Lenders

A predator is defined as one that preys on others, which is why some lenders have fittingly earned the title as predatory mortgage lenders.  Excessively high interest rates, questionable and/or hidden fees and high pressure tactics used to direct borrowers to a larger loan than they may be able to afford are trademark characteristics of a predatory mortgage lender.

 

Prey Verses Predator

When it comes to obtaining a mortgage, the rules of the jungle often apply.  If you aren't careful, you may find yourself in the grasp of a questionable foe.  If you are someone who has had past credit problems or simply find yourself struggling to obtain a mortgage, it may seem like a good idea to sign on with any lender who can close the deal.

But wait, jungle etiquette suggests that you should be knowledgeable of your surroundings and always look before you leap.  Before making a quick decision on a loan that nobody else would approve, ask yourself whether or not the deal is a good one for you.

 

Measuring Up

If you suspect that you have been subjected to a predatory mortgage lender, look at how they measure up to other lenders.  Were you charged fees up front and, if so, how much were they and what were they for?  Do the lender's interest rates compare to current market rates or do they exceed them?  When reading the fine print, do you notice fees that were never mentioned before but have now suddenly appeared in the paperwork?  An honest lender has nothing to hide and will not surprise you with unexpected costs.

 

Who's At Risk

To put it simply, anyone is at risk for dealing with a predatory mortgage lender.  This likelihood increases, however, if the homebuyer lacks the proper knowledge in how to identify an unscrupulous lender who preys on the misfortune of others.

Individuals who are especially vulnerable include those that have been turned down by other lenders and have little or no hope of obtaining a conventional loan.  This may include individuals with severe past credit problems, accounts in collections, first-time homebuyers with little or no credit history and the elderly who have difficulty understanding the loan process or reading the fine print.

When it comes to obtaining a home loan, the process can be both exciting and confusing.  There is a lot of paperwork to be signed, details to be worked out and numbers to be crunched.  Your REALTOR® can help to steer you toward a lender that will help you to get the best value for your dollar.

 

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Comments (19)

Debbie Malone
Londeree's Real Estate & Property Management - Lynchburg, VA
From Lynchburg To The Lake (434) 546-0369

Diana, we are so fortunate in the Lynchburg area to have local lenders who work with a variety of programs. I always recommend buyers stay local. Nice to know the underwriter is DOWN THE HALL!

Aug 27, 2014 01:36 PM
Diana Dahlberg
1 Month Realty - Pleasant Prairie, WI
Real Estate in Kenosha, WI since 1994 262-308-3563

Debbie Malone I agree! we have many awesome lenders in our area as well.  Unfortunately there are times when buyers come to me already pre-approved with a lender from out of the area ... and although I make the recommendation to stay Local ... they don't always listen.  Thanks for your comments!

Aug 27, 2014 03:41 PM
ReadySetLoan Condo Approval Team
ReadySetLoan Condo Team LLC - South Windsor, CT
The FHA/VA Condo Project Approval Specialists

Great post Diana.  I used to work for a mortgage broker whose objective was to make the most money on every transaction.  To do so, he looked for anything that he could point to in order to say "well, this won't be an easy loan to get because of X, Y or Z so we will have to use a 'special' program to get it done.  It's a little more expensive, but I will make it my mission to get you a home."  He was slick.

Aug 28, 2014 08:45 PM
Diana Dahlberg
1 Month Realty - Pleasant Prairie, WI
Real Estate in Kenosha, WI since 1994 262-308-3563

Eric:  Wow!  It's a shame that we have people who think this way.  I'm glad you found a better place and looks like you are doing great! Wishing you success in the future.  Let's stay in touch!

Aug 29, 2014 05:34 AM
Sharon Tara
Sharon Tara Transformations - Portsmouth, NH
New Hampshire Home Stager

Excellent information for anyone looking for a lender.  It's important to be informed and cautious!

Sep 01, 2014 07:03 AM
Diana Dahlberg
1 Month Realty - Pleasant Prairie, WI
Real Estate in Kenosha, WI since 1994 262-308-3563

Sharon Tara thanks for your comments!  We can't get too much information.  Happy Labor Day!

Sep 01, 2014 07:08 AM
Mark Don McInnes, Sandpoint
Sandpoint Realty LLC - Sandpoint, ID
North Idaho Real Estate - 208-255.6227

All good advice.  I especially like Prey VS Predator.   Make it a great week ahead.  Mark

Sep 01, 2014 04:55 PM
Diana Dahlberg
1 Month Realty - Pleasant Prairie, WI
Real Estate in Kenosha, WI since 1994 262-308-3563

Mark Don McInnes, Associate Broker Thanks for your comments.  I'm having a crazy day today ... so after reading your comment I thought ... hmmmmm, Pray against Predators!  Daveat Emptor ...There, I said it.  Have an awesome week!

Sep 02, 2014 06:45 AM
Joy Daniels
Joy Daniels Real Estate Group, Ltd. - Harrisburg, PA

This is something that many don't ever consider.  Thank you for your post and welcome to Active Rain.  I'll be seeing you around!! :)

Sep 04, 2014 09:30 PM
Pamela Seley
West Coast Realty Division - Murrieta, CA
Residential Real Estate Agent serving SW RivCo CA

Sage advice. Love your statement about "jungle etiquette." Indeed being knowledgeable and aware of our surroundings is the best protection. It's true there are predatory mortgage lenders out there, even with all the checks and balances in place. 

Sep 05, 2014 01:23 AM
Diana Dahlberg
1 Month Realty - Pleasant Prairie, WI
Real Estate in Kenosha, WI since 1994 262-308-3563

Joy Daniels Thanks for your comment and welcome message.  I'm looking foward to seeing you around too.  I'm happy to be standing in the rain!

Sep 05, 2014 02:00 AM
Diana Dahlberg
1 Month Realty - Pleasant Prairie, WI
Real Estate in Kenosha, WI since 1994 262-308-3563

Thanks Pamela for your response.  We can never be too careful ... People fail for lack of knowledge ... and we (as the Professional) need to make sure our clients are informed.

Sep 05, 2014 02:02 AM
Bridget "Mortgage Mama" McGee
SWBC Mortgage 410-960-2061 - Baltimore, MD
Maryland Mortgage Mama NMLS#196068

Diana, It is so sad when folks are not treated with honor and respect.  The mortgage meltdown and subsequent licensing rules have driven a lot of the bad eggs out of the business.  Unfortunately, there are folks in every business that are less than ethical and give the good ones a bad name!   Referrals are key!

Sep 08, 2014 01:19 PM
Dorie Dillard Austin TX
Coldwell Banker Realty ~ 512.750.6899 - Austin, TX
NW Austin ~ Canyon Creek and Spicewood/Balcones

Good morning Diana,

I came over from Rebecca's post this morning to read one of your posts and say welcome to Active Rain! Great topic and I always like to work with good local Lenders that I know and trust to be fair and honest with my clients.

Sep 08, 2014 09:31 PM
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi
NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656 - New Lenox, IL
708.921.6331 - 40+ yrs experience

Diana:  I know I'm late to the post here ... but wanted to say thank you for posting this info.  Sad that it is necessary.  At a former company, I actually took some heat for not charging my clients enough.  Needless to say, I'm not with that company any longer.  I want to be able to look myself in the eyes each morning when I shave ...

Gene

Sep 09, 2014 06:28 AM
Diana Dahlberg
1 Month Realty - Pleasant Prairie, WI
Real Estate in Kenosha, WI since 1994 262-308-3563

Bridget McGee Totally agree.  We have to be so careful and when I find that reputable Lender ... my referrals funnel into their stream of income.

Dorie Dillard Thanks for stopping by and sending yourbest wishes and comments. Our business clients expect that we will be watching out for them.

Sep 09, 2014 11:29 AM
Diana Dahlberg
1 Month Realty - Pleasant Prairie, WI
Real Estate in Kenosha, WI since 1994 262-308-3563

Gene Mundt You are never too late to say a kind and encouraging word. Thanks for sharing your testimony. Sounds like you have the "better choice".  Best Wishes!

Sep 09, 2014 11:31 AM
Lynn B. Friedman CRS Atlanta, GA 404-939-2727
Atlanta Homes ODAT Realty - Love our Great City - Love our Clients! Buckhead - Midtown - Westside - Atlanta, GA
Concierge Service for Our Atlanta Sellers & Buyers

Diana Dahlberg

Your writing is so lively.
You really get your point across.
Folks looking for loans need to be very careful!

Have a happy day -
Lynn

Sep 28, 2014 12:03 AM
Diana Dahlberg
1 Month Realty - Pleasant Prairie, WI
Real Estate in Kenosha, WI since 1994 262-308-3563

Lynn B. Friedman thanks for your comments. I appreciate your input and also have received your other recommendation about putting my location on my profile. Done!  Thank you so much!  Have a Blessed Day!  Diana

Sep 28, 2014 05:53 AM