Protect Yourself From Mortgage Foreclosure Predators
By Cynthia Tabernacki
06/07/2006
If you’re not careful, you too can be a victim of a predatory lender. The Truth in Lending Act is supposed to protect consumers from such things from happening, but lenders and brokers alike can find ways to deceive you, which may not be noticed for many months or years. Luckily, you can file a claim against your lender if you feel they are in violation of the act and other regulatory laws for credit transactions. If a violation is proven, you may be entitled to certain retribution, such as 100% of your payments applied to principal, plus punitive damages (money in your pocket).
Have a look at the list below. If even one bullet point applies to you, then your next step needs to be a consultation with a professional auditor to review your loan documents. This includes any and all correspondence, monthly statements or account history:
Repeated loan refinance (more than once) within a three year time period. This technique is used to charge high loan origination fees, closing costs, points, penalties and other charges – known as ‘flipping.’
- Excessive closing costs on the loan including points and fees.
Terms of the loan at closing were changed or different from what you agreed to earlier in the process.
- Kickbacks paid to your mortgage broker from the lender. Look for unusual entries on your HUD1 Settlement Statement, commonly referred to as a Premium, POC, Paid-Out of Closing, YSP or Yield Spread Premium.
- Refinancing that resulted in higher rather than lower rates.
- Interest above 9.5%.
- Loan purpose was for home improvements, but the work was done improperly or not at all.
- Lender posted your payments late or increased your monthly minimum suddenly.
- Lender added extra charges that you did not approve, such as insurance or property preservation charges.
- Mortgage company does not answer your inquiries – by law they must respond to complaints and requests in a timely manner. You may be entitled to $2,000 per incident.
- Collections letters were sent to you, or other contact was made that did not comply with the Fair Debt Collection Practices Act.
Lender provided an incomplete Notice of Right to Cancel.
- Adjustments on your ARM (Adjustable Rate Mortgage) do not match the published rates.
- Loan documents never provided to you.
- You signed a document at closing stating that you would not cancel your loan (you have a right to cancel).
- Loan contains a prepayment penalty.
- Loan documents provided at closing (lender must complete after closing).
Again, if any of the above applies to you, see an auditor immediately. The longer you wait, the more you put yourself at risk. Avoid these shady techniques, as many of them are designed to put you into foreclosure. The bank can then reclaim your property, including any equity you’ve established, and sell it off for even more profit, such as to a collections company who specializes in capturing more profit from these bad debts, many of which were not even the fault of the borrower.
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