What Is Predatory Lending?

Predatory Lending are abusive practices used in the mortgage industry that strip borrowers of home equity and threaten families with bankruptcy and foreclosure.

Predatory Lending can be broken down into three categories: Mortgage Origination, Mortgage Servicing; and Mortgage Collection and Foreclosure.

Mortgage Origination is the process by which you obtain your home loan from a mortgage broker or a bank.

Predatory lending practices in Mortgage Origination include:
# Excessive points;
# Charging fees not allowed or for services not delivered;
# Charging more than once for the same fee
# Providing a low teaser rate that adjusts to a rate you cannot afford;
# Successively refinancing your loan of “flipping;”
# “Steering” you into a loan that is more profitable to the Mortgage Originator;
# Changing the loan terms at closing or “bait & switch;”
# Closing in a location where you cannot adequately review the documents;
# Serving alcohol prior to closing;
# Coaching you to put minimum income or assets on you loan so that you will qualify for a certain amount;
# Securing an inflated appraisal;
# Receiving a kickback in money or favors from a particular escrow, title, appraiser or other service provider;
# Promising they will refinance your mortgage before your payment resets to a higher amount;
# Having you sign blank documents;
# Forging documents and signatures;
# Changing documents after you have signed them; and
# Loans with prepayment penalties or balloon payments.

Mortgage Servicing is the process of collecting loan payments and credit your loan.

Predatory lending practices in Mortgage Servicing include:
# Not applying payments on time;
# Applying payments to “Suspense;”
# “Jamming” illegal or improper fees;
# Creating an escrow or impounds account not allowed by the documents;
# Force placing insurance when you have adequate coverage;
# Improperly reporting negative credit history;
# Failing to provide you a detailed loan history; and
# Refusing to return your calls or letters.
#

Mortgage Collection & Foreclosure is the process Lenders use when you pay off your loan or when you house is repossessed for non-payment

Predatory lending practices in Mortgage Collection & Foreclosure include:
# Producing a payoff statement that includes improper charges & fees;
# Foreclosing in the name of an entity that is not the true owner of the mortgage;
# Failing to provide Default Loan Servicing required by all Fannie Mae mortgages;
# Failing to follow due process in foreclosure;
# Fraud on the court;
# Failing to provide copies of all documents and assignments; and
# Refusing to adequately communicate with you.

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One thought on “What Is Predatory Lending?”

  1. My husband and I have owned our home for over 20 years. We have made payments every month without a missed payment. However, this last year we fell behind in our property taxes. Wells Fargo gave us a warning letter regarding the 4700.00 in unpaid property tax and said that if we didn’t prove that the taxes were paid in full By Dec 10th 2009 they would take action. As we have been experiencing financial hardships including job loss, loss of income through lack of customers for my small business, we were not able to pay the taxes in December. We have 2 school age children and it’s all we can do to keep food on the table now. But we have managed to keep our good credit.

    Now we have been told that Wells Fargo has created a tax ESCROW account that requires an additional 10,000+ reserve that is due immediately. To force collection, they have adjusted our mortgage payment to 2,700+ from the fixed monthly payment of 1483. We can’t pay it, we are barely staying current on the existing payment. This forced escrow account is creating a more serious hardship that may drive us to bankruptcy or foreclosure or both. What are our options?

    I would love to hear your expert opinion, we really need to understand what is happening to us and what we can do about it.

    Reply

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