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Home > Predatory Lending

Predatory Lending

Before shopping for a new home, car or credit card, it pays to check your credit report and make sure it's accurate. If you spot any errors or old problems, correcting your credit report can be a lengthy but worthwhile effort. If your credit just isn't up to snuff, there are steps you can take to strengthen your credit profile. Finally, there are lenders for folks with less-than-perfect credit and more Mortgage Lenders articles you can turn to for help.

Checking your credit report - If you are applying for a loan or credit, records of your previous dealings with someone else's money are vital. Whether you get that mortgage or credit card, or not, may depend on a network of credit reporting agencies that either share information with, or are owned by, three major credit bureaus. This report is often a critical factor in credit scoring systems that lenders use to issue credit cards as well as mortgages or other loans.

So, if you're considering making a major financial move it's a good idea to check your credit report to know where you stand. That way you can be aware of, and/or take care of, problems before they jump up and derail your plans.

If you find problems, or if potential creditors discover them, you can take steps to rebuild damaged credit and clean up that record.

If you've made mistakes in paying previous loans, bounced checks, made late payments or had other problems, you may still be able to reduce the amount of damage they will do to your credit with explanations or some basic repair.

Predatory Lending can be Lenders, Appraisers, Mortgage Brokers and Home Improvement Contractors who:

  • Sell properties for much more than they are worth using false appraisals.

  • Encourage borrowers to lie about their income, expenses, or cash available for down payments in order to get a loan.

  • Knowingly lend more money than a borrower can afford to repay.

  • Charge high interest rates to borrowers based on their race or national origin and not on their credit history.

  • Charge fees for unnecessary or nonexistent products and services.

  • Pressure borrowers to accept higher-risk loans such as balloon loans, interest only payments, and steep pre-payment penalties.

  • Target vulnerable borrowers to cash-out refinances offers when they know borrowers are in need of cash due to medical, unemployment or debt problems.

  • Strip homeowners' equity from their homes by convincing them to refinance again and again when there is no benefit to the borrower.

  • Use high pressure sales tactics to sell home improvements and then finance them at high interest rates.

How to Spot a Predatory Loan

  • Balloon payments.

  • High interest rates.

  • Monthly payments you can't afford.

  • Penalties for early pay-off of the loan.

  • Unauthorized refinancing of your loan.

Significant Governmental and Consumer Protection Organizations:

Second Mortgage
Fixed Rate Mortgages
Should I Refinance?
Is It Time to Grab Your Equity?
The Perils of Plastic
Is the 50-Year Mortgage Right for You?

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