By:  LINDSEY O’NEILL, ESQ.

Buying a home is still one of the biggest American dreams and, for many families, the most important financial decisions they will make in their lives.  However, not all mortgage loans are equal…. and when a loan is actually a bad loan… the dream of home ownership can turn into a nightmare!  While certainly there are certainly very ethical mortgage industry professionals out there helping families achieve their dreams….. unfortunately, there are also unsavory folks out there who have caused enormous harm to unsuspecting consumers.  The U.S. Department of Housing and Urban Development recommends several helpful tips for identifying potentially fraudulent practices by mortgage industry professionals.  Mortgage loan fraud occurs when mortgage industry professionals, including lenders, appraisers, mortgage brokers or home improvement contractors partake in deceptive practices designed to make a profit at your expense!

Below are some warnings signs of predatory lending and mortgage loan fraud.   While any one of these may not constitute fraud in any one situation, keep them in mind when shopping for loans and interacting with the mortgage industry.

• Artificially inflating home prices and selling properties for much more than they are worth compared to those of the same type and size in the neighborhood.
• Using false appraisals.
• Encouraging borrowers to lie about their income, expenses, or cash available for downpayments in order to get a loan.
• Lending more money on a mortgage than the lender knows the borrower can afford to repay.
• Charging high interest rates to borrowers based on their race or national origin and not on their credit history.
• Charging fees for unnecessary or nonexistent products and services.
• Pressuring borrowers to accept high-risk loans such as balloon loans, interest only payments, and steep pre-payment penalties.
• Targeting vulnerable borrowers to cash-out refinance offers when they know borrowers are in need of cash due to medical, unemployment or debt problems.
• “Stripping” homeowners’ equity from their homes by convincing them to refinance again and again when there is no benefit to the borrower.
• Using high pressure sales tactics to sell home improvements and then finance them at high interest rates.
• Telling potential borrowers that a certain lender or investor is their only chance of getting a loan or owning a home.
• Asking borrowers to sign sales contracts or loan documents that are blank or that contain information which is not true.
• Telling borrowers that the Federal Housing Administration insurance protects them against property defects or loan fraud (when it doesn’t).
• Using “bait and switch” tactics in loan terms and fees – including terms or fees in closing documents that are different from what was initially represented.
• Telling borrowers that refinancing can solve their credit or money problems.

Above all else… be aware of the warning signs of predatory lending when buying a home.  Don’t get pressured into something you’re not comfortable with or that just doesn’t feel right.  Be responsible in the process and avoid your home ownership dreams turning into foreclosure or worse financial ruin.

Learn more here: Mortgage Loan Fraud – Predatory Lending.  If you believe you may have been a victim of mortgage loan fraud or predatory lending, contact an attorney immediately to discuss what legal options may be availalbe and to find out if you qualify for any relief today.