Mortgage Modification Scams

Red Flags of Predatory Lenders and Mortgage Modification Scams

Throwing yourself into the world of mortgages and other loans can be a daunting experience, particularly if you don’t know much about it. Most lenders will try and help you to the best of their abilities, but there will be a few who try and take advantage of that inexperience. These lenders are known as predatory lenders and make use of unethical lending practices to profit at your expense. What they do is not actually illegal, so you need to look out for yourself or if you’re really not sure, get the help of a lawyer before you commit to anything.

Common Signs Of Predatory lending

Lump Sum Payments – They may offer you low interest rates on your monthly repayments but then build in an excessive lump sum payment at a milestone in the loan term that you probably won’t be able to afford.

Lack Patience – Considering buying a house is probably the biggest single purchase you’ll ever make in your life, you’d think a lender would give you as much time as you need to think over the various options you have available to you. Expect to experience overly aggressive sales tactics from a predatory lender as they attempt to bully you into signing up for a mortgage with them. If they state that there is a time limit on their offer to you this is a definite no-no.

Sell Non-Suitable Products – They will usually try and sell you a mortgage that will make no sense for you personal situation. This is because they are thinking about what would benefit them the most rather than you.

High Loan Fees – This is another way they may try and make a profit off you. The fees they charge you will usually be higher than with ethical lenders. They may also try and increase the fees between the initial discussions and the signing of contracts, so watch out for that.

If you are in the market for a mortgage loan, look out for these red flags and if you’re in negotiations with a lender offering you packages with these characteristics then run. Just remember, they don’t care about you, they only care about lining their own pockets.

Home Loan Modification and the Making Home Affordable Program

The following is a list of the current Home Loan Modification options offered under the MHA plan (taken from www.makinghomeaffordable.gov): Home Affordable Modification Program SM (HAMPSM), Principal Reduction Alternative SM (PRA), Second Lien Modification Program (2MP), FHA Home Affordable Modification Program (FHA-HAMP), USDA’s Special Loan Servicing, Veteran’s Affairs Home Affordable Modification (VA-HAMP), Home Affordable Foreclosure Alternatives Program (HAFA), Second Lien Modification Program for Federal Housing Administration Loans (FHA-2LP), Home Affordable Refinance Program (HARP), FHA Refinance for Borrowers with Negative Equity (FHA Short Refinance), Home Affordable Unemployment Program (UP), Housing Finance Agency Innovation Fund for the Hardest Hit Housing Markets (HHF)