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With the complexity of the mortgage process and the large fees at stake, some loan providers seek to profit at your expense. To make sure you are being treated ethically, you should:
Watch out for specific unethical practices
Use our Borrower's Bill of Rights to ask direct questions
Benchmark rates and fees using this site
Unethical Practices
Rate Lowballing
Slipping Things by You
Making Your Credit Score Seem Worse Than It Is
Ask your broker/lender tough questions
As foreclosures increase in America, a new breed of criminal is on the rise - the predatory lender. Predatory lenders target specific groups; the elderly, immigrants, and people struggling to pay bills are all at risk.
predatory lenders are looking for people with an inability, not ability, to pay. Always insure you are not falling into these traps set by predators. Counseling on credit and loans is always available. Seek guidance from friends or neighbors who have had experience with them. In addition, many local housing departments offer assistance and guidance on borrowing
Recent headlines about the troubled subprime lending industry are making Americans more aware of the consequences of risky lending practices. But unscrupulous lenders and scam artists continue to prey on unsuspecting loan shoppers and homeowners.
Unfortunately, loan-related scams aren't restricted to tricking consumers into loans with outrageously high interest rates. Today's sophisticated scammers are using loans as a vehicle to do everything from stealing sensitive personal information to virtually stealing a credit-challenged homeowner's own home. The mortgage experts at Loan.com have identified five top scams that all consumers - mortgage shoppers and homeowners alike - should be on the look-out for.
1. Unsolicited phone calls
2. "Helpful" contractors
3. Unexpected change of lenders
4. "Rescue" agencies
5. "We finance anyone!"
The Truth in Lending laws were passed by Congress in 1969 and are part of the Consumer Credit Protection Act. They require anyone who extends credit to a consumer to fully disclose the credit terms, including:
How finance charges were computed
The annual percentage rate
The total finance charge over the life of the loan
Payment schedule and total number of payments that will be made over the life of the loan
Prepayment penalties (if any)
Late payment terms
If you have an adjustable rate mortgage (ARM), the lender must disclose the maximum interest rate that can be charged.
When and how finance charges are imposed
These things must be disclosed up front, in writing, and in terms that are easy to understand.
Unethical lenders will often lie about the following topics:
Ask your real estate agent, too. Most agents have brokers and lenders with whom they work. Keep in mind, though, that many agents have their own agendas. They want your loan to close quickly, and may refer you to lenders simply because they work fast. It doesn't mean they won't be ethical, but it's a good idea to keep that potential conflict of interest in mind and watch out for your own interests
Most 'lenders' give reliable quotes, but you can't really trust quotes until you're ready to lock in a rate.
When you're just "shopping around" looking for the best deal, you're putting loan officers in a situation where it's in their best interests to say anything just to keep you interested in their bank. Odds are, at least one loan officer will lie to you in that situation.
Lender payments to your broker are legal. Whether they're ethical or not is up for debate.
Typically, what happens when you go through a mortgage broker is that the broker gets a rate quote from a lender, and then marks up the rate. For example, a lender may quote a 7% loan with 2 points, but the broker gives you a quote of 7% with 3 points. That 1-point difference is paid to the broker.
For the first time since July 2005, there has been a decline in gross lending, the Council of Mortgage Lenders (CML) has announced.
The total figure stood at £30.7 billion for November, an eight per cent decrease from the corresponding period in 2006.
Abbey National and the Yorkshire Building Society have become the latest lenders to lower their fixed-rate tracker mortgages.
The moves come on the heels of a long-awaited cut in the Bank of England's base rate of borrowing and are being seen as an attempt to maintain market competitiveness.
Mortgage products available from Abbey now include two or three-year deals at 5.89 per cent interest; a five-year deal at 5.79 per cent; and a range of ten year mortgages with between 5.64 and 5.94 per cent interest.
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