Stopping Predatory Home Mortgage Lending Practices

It's quite shocking but the Federal law has no definition for predatory lending. When you want protection from abusive lenders you must act on your own rather depending on an outsider. Following are some steps one can take to stop predatory lending practices

1. Always be careful when you come across advertisements that target particular neighborhoods, demographics etc. the basic rule is if you did not originate the loan it might be possible that you are the target so always be alert.


2. Lending money to people who cannot afford the loan: this is a tactic which you should be aware of. Such practices include convincing buyers for high interest rates, lying about the debt levels etc so as to increase the commission of the lender. The rule to be followed in this case is that if a lender asks you to sign any document or paper which has false statements, just say ‘NO'.


3. High rates of interest: many factors determine the rate of interest on your loan. Generally the rate is decided by market factors which are out of your control but your income and down payment decide the final rate to be paid by you. Bad lenders generally try to convince the borrower to pay high rates tan those prevailing in the market. The rule to deal with this is to put up a question when you feel that the rate of interest is too high. If the lender has no valid answers, look for any other lender.


4. Steering: Generally most lenders have lot of schemes available for you. They normally give you a lot of options and then let you decide. If you think the lender is pushing you to go for a scheme you are not comfortable with just leave him.


5. Every lender has right to charge fees for their services however the fees charged by him should be reasonable. If you feel that the lender is charging high fees then ask for any other option and see whether the charges are comparable. But you must be careful doing this as lenders might say anything and then refuse to admit later regarding what they said earlier.


6. There are some home improvement schemes which are generally poor and lenders usually target elder people or people belonging to a low income group. In this practice someone would come at your home and will offer to improve the house and also refinance the house at the same time so that nothing is spent out of your pocket. But mostly the work done is totally poor and the refinancing is a total shit. Thus you should always be alert in handling people coming at your door offering refinancing schemes.