Monday, December 22, 2003
LENDING SCAMS
What to watch for
Some homeowners get into financial trouble and lose their homes in foreclosure because they get caught up in a mortgage scam sometimes called predatory lending. The Better Business Bureau of the Mahoning Valley says the following practices can be signs of trouble with a loan:
Lender charges high interest rates and/or undisclosed or improper fees.
Lender offers one set of loan terms but then pressures borrower to accept higher charges or changes the paperwork to higher terms at closing, a bait-and-switch technique.
Loan offers low monthly payments, but there's a large balloon payment due at the end.
Loan is packed with costly and unnecessary products, such as credit life and disability insurance.
Lender practices "flipping," a term referring to repeated refinancing of the loan, each refinance coming with more fees and a larger loan principle.
Lender misrepresents or hides critical loan terms, including the borrower's three-day right to cancel the loan.
Source: Better Business Bureau of Mahoning Valley