Mortgage Fraud and Predatory Mortgages
MORTGAGE FRAUDS AND PREDATORY MORTGAGES?
HOME INVASIONS WITH A PEN
WHY PREY ON THE ELDERLY?
Most Americans over 50 own their own homes, either clear or with a small mortgage balance
Most own homes without any liens
Most have a fixed income
Equity Rich and Cash Poor
Predatory lenders try to maneuver senior citizens into loans they don't need and can't afford.
HOW PREDATORS WORK
Seniors may feel financial pressure living on fixed incomes
Predatory lenders usually push loans for medical bills, property taxes or high-priced home repairs
High interest rates and fees on the loans can create more financial stress
Collection strategies may include harassment geared to making your house theirs
Predatory lenders seek out vulnerable seniors at a time of loss and or those inexperienced in dealing with financial, home repair, or maintenance problems.
Some lenders and contractors work together to convince seniors that repairs are needed and they have a certain contractor available to make the repair.
THE WARNING SIGNS
Don't fall prey to the song and dance of a predatory lender...
Seniors who become "upside down" with their mortgages face the danger of losing their most valuable possession - their home.
These loans may not be illegal in most cases...but they are unfair and dangerous because they are designed so that you, the borrower, will fail.
A predatory mortgage will have one or more of the following warning signs:
They Sought YOU out...The lender approaches the borrower and "sells" them on the idea that they "need" the loan or service.
Abusive Fees & Excessive Fees...A loan with points and fees higher than the 5% allowed by law in most states, or the 8% allowed under federal law.
Prepayment Penalties...If you have to pay a fee to pay off the mortgage early.
Flipping...Several re-financings that may require fee, with no real savings or benefits savings to the borrower.
Mandatory Arbitration...Borrowers with a disputes with their lender must use arbitration, which can be more expensive and less effective, dispute rather than seeking relief in a court of law.
Steering...Lenders send borrowers who qualify for more competitive rates to higher interest lenders and discourage borrowers from shopping for credit on their own in order to compare rates.
Packaging...Borrowers are urged to buy certain types of insurances or debt cancellation agreements in a lump sum up front that may have no benefit to them.
Kickbacks...Lenders may receive kickbacks for directing borrowers to high interest, high risk loans, even when they could qualify for lower interest rate loans. Lenders reward them by building in a kickback which could cost borrowers thousands of dollars.
AVOID THE STING
Beware of lenders or contractors "selling" door-to-door.
Never let a stranger into your home when you are alone.
First, make sure you need the loan or service.
Shop around for a loan. Take your time and talk to someone you trust before making a decision.
Don't pay fees up front or before the work is started.
Read any paperwork carefully, even the fine print. Have someone else read it too. Be sure the terms you agree to is exactly what's on the paper you sign.
'No Credit? No Problem' should mean "no deal."
Never be rushed into signing a contract.
Watch out for "balloon payments." A very large single payments, usually at the end of a contract.
You have three (3) days to get out of most home solicitation contracts, but that won't get your cash back from a fly-by-night operator once he's gone.
Never give personal or financial information to strangers, especially over the phone or internet. Keep your private information private.
NOTICE TO READER
This information is offered only for educational purposes. It is not intended to be used as specific legal advice. Every individual case is different.