Mortgage Crisis? Beware of the Predatory Lender!

When shopping for a new home loan to balance your mortgage in your favor, take care to make sure that your lender isn't involved in predatory lending practices.

With the U.S. housing market experiencing one of its worst downturns in memory, consumers who are in a position to refinance their mortgages in a bid to improve their financial position need to be careful when seeking out a new loan.

While the overwhelming majority of lenders are knowledgeable, professional, and consumer friendly, there is a small pool of lenders who are operating just below the radar, predatory lenders who are looking out for #1. In this case, they’re the #1 and you’re only a means to an end – a way for the lender to sell you a loan that won’t improve your financial standing, rather quite possibly do the opposite.

The U.S. Department of Housing and Urban Development (HUD) continues to warn consumers of the predatory loan practices out there. We’ve taken a look at what they are saying and are including the following links courtesy of HUD to help you push back predatory lending:

Protect yourself from predatory lenders: For information about loan fraud and advice about preventing it, see Don’t Be A Victim of Loan Fraud.

Local information on predatory lending: Here are some Local Resources by state, that can help you avoid being a victim of predatory lending.

For FHA loans: For problems relating to origination, underwriting, or appraisals contact the FHA Resource Center.

Avoiding foreclosure on an FHA loan: Visit the HUD National Servicing Center web page.

Non-FHA mortgage loans: For complaints concerning practices which include disclosure of interest rates and finance charges (APR), prepayment penalties, credit life insurance, fraud, deception, etc. contact the appropriate agency from this list to complain about the mortgage lender or mortgage broker.

Lender threatening to foreclose or mortgage in default: HUD funds housing counseling agencies throughout the country. To find a housing counseling agency near you, call toll-free (800) 569-4287 immediately for free guidance or visit the web page.

Settlement Procedures: (FHA and non-FHA mortgages). Visit the RESPA web page for information on RESPA disclosure requirements such as the Good Faith Estimate, HUD-1 and escrow account statements, and how to file a complaint with your lender concerning the servicing of your loan.

File a housing discrimination complaint: Discrimination in mortgage lending is prohibited by the federal Fair Housing Act and HUD’s Office of Fair Housing and Equal Opportunity actively enforces those provisions of the law. Learn how the Fair Housing Act can help you fight predatory lending.

As always, if you believe that you’re being taken advantage of, taking action at the soonest possible moment will save you much headache and possible heartache later on. Local advocacy groups may be able to help you out, but your best course of action is the personal moves you make to counter predatory lending.

Tags: Consumer Tips, HUD, mortgage broker, mortgages, predatory lending