fbpx

4 Signs of Predatory Mortgage Lending

Homeownership is the goal of many Americans. However, in the process of loan shopping, many homebuyers fail to do their research and fall victim to predatory mortgage lending. Predatory mortgage lending includes any unfair practices that challenge a borrower’s ability to reasonably repay their debt while benefiting the lender. Excessive fees, high-interest rates, and loan flipping are just a few of the many ways a lender can engage in predatory practices. Unfortunately, predatory lenders tend to target vulnerable borrowers, trapping them in cycles of debt that are impossible to escape. 

If you believe you are the victim of predatory mortgage lending, it’s essential to take action. Being stuck in a never-ending cycle of mortgage debt can have long-term implications for your financial health, which is why it’s important to get on top of the situation as soon as possible. Working with a skilled debt settlement lawyer is a great strategy for finding the best solution to your mortgage debt. Here are 4 signs of predatory mortgage lending

High-Interest Rates

When you are in the process of buying a home, it’s important to do research on current mortgage interest rates. While the interest rates available to you will depend on your credit score, it’s important to be wary of interest rates that seem exceptionally high. Even if your credit score is less than ideal, it’s important to research a realistic rate you might be able to secure. If a lender offers you something dramatically higher, it can be a sign of predatory lending. In general, it’s best to get loan estimates from at least three lenders. 

Excessive and Hidden Fees 

There are many expenses associated with buying a home, such as closing costs, credit check fees, and more. However, while some additional fees and costs are normal, lenders may charge abnormally high prices for them. Some fees you may have when taking out a mortgage include:

  • An appraisal fee. Some banks or lenders want to have a home appraised before issuing a loan. This process involves paying a licensed professional to inspect a home to determine its value. 
  • Credit check fee. Most lenders will require borrowers to pay to pull their own credit report. 
  • Origination fee. This is a fee that a lender charges to start the loan process. However, the majority of lenders do not require this fee, and if a lender is asking for an origination fee, it can be a sign of predatory lending. 
  • Application fees. Some lenders will require borrowers to pay to fill out a loan application

These fees can be normal and don’t always signify predatory lending. However, some lenders will intentionally charge high prices for them. In these situations, lenders often pocket thousands of dollars in fees.  In shopping for loans, it’s important to be wary of vague-sounding fees and always ask about the reasoning behind additional costs.

Variable Rates That Increase Dramatically Over the Loan Term 

It’s important to be cautious of adjustable-rate loans—especially if the interest rate can only go higher. With these loans, it is essential to understand the gravity of the worst-case scenario of making payments at the highest rate outlined in your agreement. 

Prepayment Penalties

Prepayment penalties are any fees charged by your lender when you pay off your mortgage when its term ends. This means that in the scenario that you want to pay off your mortgage before its term maturity, you might get hit with some unexpected fees. In general, it’s best to avoid mortgages with prepayment penalties. 

Contact a Skilled Debt Settlement Lawyer at McCarthy Law for Help with Your Mortgage Debt

If you feel trapped in a never-ending cycle of mortgage debt and don’t know the best approach for tackling your payments, it can be helpful to meet with a skilled debt settlement lawyer. At McCarthy Law, our attorneys are dedicated to helping homeowners navigate the complexities of mortgage debt. Our licensed attorneys negotiate with lenders to reduce the interest rate and balance of your outstanding mortgage. At the end of a successful negotiation, our clients pay only a fraction of their original loan balance. 

To schedule a consultation with one of our skilled student loan settlement attorneys, call (855) 976-5777 or fill out our online contact form.

The following two tabs change content below.

Jacob Hippensteel

Jacob Hippensteel focuses his practice on consumer protection and business litigation. Jacob regularly assists clients by ensuring that their rights as consumers are protected under Federal and State consumer protection laws. Jacob regularly advises clients on a wide variety of issues, as well as protecting those client’s interests in federal and state courts.