Is your dream house starting to feel like a nightmare due to the prospective mortgage terms? Are you already locked into a loan and feeling blindsided by contract terms you didn't fully understand or weren't expecting to be so harsh? It's possible you're actually a victim of predatory lending. Compare your lender's behavior with some of these predatory actions and see if they sound all too familiar.
Contacting Potential Borrowers First
Predatory lenders primarily aim to minimize the risk of getting caught and maximize the money they can milk out of their victims. One way to ensure they get borrowers who are easy to manipulate is to seek out financially vulnerable people and pursue their business specifically. While it's somewhat normal for lenders you have used in the past to send you advertisements, be wary of lenders you don't recognize who seem to know you, especially if you have a low credit score.
Discouraging Early Repayment
While most lenders hope you'll take the full term to repay a loan and thereby render them as much interest as possible, good lenders would never dream of voicing such thoughts to a borrower. If your lender goes a step farther and actively discourages you from paying back the loan early with harsh fees, it's a big red flag that you might be getting into business with a shark.
Most importantly, watch out for early repayment penalties on loans that have adjustable interest or terms with an interest rate that increases over time. Such loans often use the high penalty for paying up early to keep you trapped with the high interest.
Pressure To Flip Your Loan
Many lenders will offer you the chance to roll your old home loan over into a new one if you have been repaying to your best ability and you need money for something else. All the same, be cautious with lenders that seem to be up-selling a loan flip to you. If you feel encouraged to take out larger and larger loans instead of paying off the one you have, it's a good sign your lender doesn't have your best interest at heart.
Failure To Disclose All Loan Terms
The most legally actionable and the most financially damaging thing a predatory lender can do is hoodwink you into taking out a loan you don't fully understand. The worst offenders will often go after the elderly, the ill, or people with a low education level, only to spring harsh terms, high interest, and sudden fees on them halfway through repayment.
Mortgages can be hard enough to repay without adding in extra fees, sudden high interest, and outright lying. If you think a predatory lender is taking advantage of you, it may be time to enlist the help of a residential real estate lawyer. With the right legal counsel, you might be able to get loan sharks off your back for good.Share
10 June 2015
Are you trying to buy a home using owner financing options? Do you know what you are reading when you read through the many pages of the contract? There are likely several terms in that contract that you don't understand. I know that when I read through the contract that I had signed, I had no idea what it said. Fortunately, I decided to take the contract to a real estate attorney to have it looked over. Had I not done that, I would never have caught the fact that I was getting seriously ripped off on the house and I would have signed the legal document locking me into the agreement. To learn the confusing terminology used in these documents, visit my website.