How to Avoid a Predatory Mortgage Lender
by Ellise Walsh

As more and more first time home buyers come flooding into the market, predatory mortgage lenders have become a real problem. Predatory mortgage lenders are those who seek to steal the equity in your home and leave you with nothing. While legitimate mortgage lenders make their money by providing a legitimate service and helping buyers afford the homes they need, predatory mortgage lenders are totally focused on their needs, most often at the expense of the innocent homeowner.

One of the best ways to avoid predatory lenders is to be an active participant in the mortgage process. Predatory mortgage lenders count on their clients to be passive and just follow the lead of the predatory lender. In many cases where people have been victimized by predatory lenders, the lender contacted the victim. This is not generally how the mortgage process works. The borrower generally has to go looking for the mortgage. The mortgage does not come looking for them. Be very suspicious of any lender that calls you out of the blue.

Predatory lenders often choose to prey on those who have spotty credit histories or high levels of credit card debt. These borrowers may not think they qualify for a mortgage, and they are prime candidates for solicitation by predatory mortgage lenders. Be wary of any lender than promises to get you a mortgage despite your bad credit history or high debt levels.

Predatory mortgage lenders also take advantage of the borrowers confusion to trap them into mortgage loans that are not appropriate for their needs. If the borrower is not sure about anything in the terms and conditions of the mortgage loan, it is vital that he or she get clarification. If you think you might be dealing with a predatory lender, it is a good idea to have an attorney review the paperwork. Spending a few dollars on an attorney now can save you a lot of grief and money down the road.

Predatory mortgage lenders have also entered the world of mortgage financing. Again, these predatory mortgage lenders often solicit those with high levels of credit card debt and attempt to lure them into refinancing the debt by using the equity in their home. What they often fail to disclose, however, are the high fees and interest rates associated with the refinancing deal. These predatory loans are designed to let the lender profit from the equity in your home.

Also be wary of lenders who offer to lend you more than your home is worth. This is another tactic predatory mortgage lenders use to lure unsuspecting home buyers. Predatory mortgage lenders will use the lure of extra cash to trap buyers into loans they cannot afford. Beware of any lender who offers to lend more than the price of the home. Legitimate mortgage lenders will insist on a down payment, even if it is small one, and they would never lend more than 100% of the home’s value.

Predatory lenders are not always easy to spot, but by using your intuition and common sense, and being an active participant in the mortgage process – you can avoid being victimized.

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