The term Predatory Lending is used in the financing world to distinguish unfair practices in the industry. Think of it like this:
You are sick and you go to the doctor. The doctor is an expert in helping sick people so you ask him to make you better. He says you have a problem; your insurance doesn’t cover it. What I can do is give you something that looks like the pill you need and you’ll get better. Unfortunately, even though you got the pill, it’s the wrong one and it causes more problems in the long run.
So, when a “Doctor”, or in this case, a Predatory Lender gives you the wrong pill, you will suffer from it. The pill in this case is a bad mortgage that doesn’t fit your needs.
How do you know if you are a target of a Predatory Lender?
The Federal Trade Commission recommends that you avoid ANY lender who:
1) Tells you to falsify information on the loan application.
2) Pressures you into applying for a loan or for more money than you need.
3) Pressures you into accepting monthly payments you can’t make.
4) Tells you it’s not important to read all the fine print in the loan papers.
5) Misrepresents the kind of credit you’re getting.
6) Promises one set of terms when you apply, but gives you another set of terms to sign at closing, with no legitimate explanation.
7) Tells you to sign blank forms – the lender says they will fill them in later.
8) Says you can’t have copies of documents that you have signed.
So the old quote “Caveat Emptor” – let the buyer beware” is perfect. You are in control at all times so if you feel you have lost that edge, please use “Caveat Emptor” as your guiding light. Get an explanation of any changes and determine for yourself if that makes sense. Ask one of our professional members to help you. Each of our member’s goals is to “Protect the Homebuyer from Start to Finish.”