Predatory lending occurs when mortgage brokers use tactics, like convincing borrowers they can afford a higher than what they can actually afford to repay. When this type of tactic is used the lending institution does not care the borrower cannot afford to repay the loan amount. They are setting the individual up to fail, which can cause them to lose their home, incur financial difficulties and can even cause them to claim bankruptcy.
Standing Up Against Predatory Lending
Predatory lending involves individuals that are not qualified for the loan amount and if you have been one of these victims harmed by a mortgage lender, you are not alone. There have been many people taken advantage of by the reassurance of mortgage lenders for loans.
Standing up to the predatory lending practices is important and when there are many people affected by the same lender using these tactics it is possible to hold the fraudulent lender accountable with the help of a class action attorney. The class-action attorney can file a lawsuit against lender fraud and this may help obtain some compensation for the harm they have done to the individual.
There is some common lender fraud tactics mortgage brokers might use:
- Interest Rates: There are predatory lenders that will take advantage of an individual involving interest rates. This can be in one of two forms, the first is to finance the loan at a high rate of interest, while assuring the borrower that they will be able to refinance at a lower rate of interest. They are assured this will be easy to do. Then there is the other interest rate tactic that takes advantage of the individual by financing their loan at a lower rate of interest, but having a balloon rate at a later date. This means the borrowers payment will increase dramatically.
- Predatory Lenders Taking Advantage: There are predatory lenders that will take advantage of the individual that wants their own home. they will convince the individual not to be concerned with the interest rate or balloon payments, that the home will increase in value each year. Making the loan terms sound appealing, whether the borrower can afford the repayment or not.
- Note Holder Sales: One of the tactics that predatory lending includes is the lender that issues a loan amount and then sells the mortgage immediately. The predatory lender is then able to walk away without any involvement and the borrower and new note holder are left with the problems that will occur.
Predatory lenders take advantage of individuals and they know this person that has a loan amount for more than they can actually afford cannot afford to hire an attorney to stand up for them. The lender knows the borrower is in deep financial trouble and at risk to lose their home and their credit rating and has no concern about the situation they have caused. The one way that the individual can fight back when predatory lending practices have affected them, is with the class action lawsuit that will represent many of the lenders victims and hold them accountable for their actions.