Most mortgage lenders in the United States are consumer-oriented and willing to play by the rules. However, not all of them act in the best interest of those they serve and may target naïve and uninformed homebuyers and homeowners.
While plenty of credible resources are available for home purchasing and refinancing, there can be a high potential for fraud in professions where large sums of money are involved.
Red flags to watch for
Consumers may want to remain skeptical if they see these warning signs:
- The lender has a very scripted approach: If the conversation with a mortgage lender feels more like a sales pitch than an honest discussion, buyers may want to proceed with caution.
- The lender puts high pressure on the buyer to sign: If homeowners are looking to refinance, they technically have three days to make up their mind. For those looking to buy a home, they may want to ask the lender what could happen if they don’t immediately secure their loan rate.
- Rates and fees are abnormally pricey: Consumers may want to call several lenders to compare prices. If the lender’s rates appear to be much higher than others in the market, purchasers may want to continue their search.
- The lender disregards poor credit scores: When it comes to buying or refinancing a home, credit almost always plays a role. If a consumer has good credit, they can get a better deal on their loan. If a consumer has bad credit, obtaining a loan can be much more difficult. If a consumer has bad credit and is offered a loan by a predatory lender, they could come with unfavorable interest rates.
- The fees at the closing table are different than what the consumer agreed to pay: If consumers run into this situation, they should question the reasoning behind it and continue to probe the lender with questions until they reach a satisfactory answer.
Consumers deserve transparency
Predatory lending can happen almost anywhere and put even fiscally stable families in financial ruin. If homeowners or buyers are worried they may be dealing with a predatory lender, they may want to contact an experienced real estate attorney. They can assist consumers in making the right decision before initialing any questionable documents.
