Unfair Lending Practices
What Is Predatory Lending/Unfair Lending Practices?
Predatory Lending involves giving loans that have high adjustable rates of interest and excessive or unnecessary fees rolled into the loan. These terrible loan terms make it very difficult for borrowers to pay the loan back at the contract terms they agreed to. What makes lending “predatory” is when a loan broker or lender instructs a borrower to take out a loan that is not really in their best interests, all so that party can make more money off the loan. Loan brokers and banks that had unfair lending practices often took advantage of borrowers’ lack of knowledge about how mortgage financing works, so borrowers did not always know what they were agreeing to.
Just because your house now is worth less than what you owe on it does not necessarily mean that you were a victim of predatory lending. For lending to be “predatory” there usually has to be some intent to deceive or under-educate the borrower so that the borrower did not fully understand the deal that they were agreeing to.
Signs of Predatory Lending
Signs of Predatory Lending and Unfair Lending practices include excessive fees, extremely high prepayment penalties, interest kickbacks, repeated refinancing on same property, unnecessary and expensive loan products and steering to unconscionable and subprime mortgages. It should be a red flag if your broker tried to convince you to make false statements about your employment and income to qualify you for are finance loan. False appraisals that inflate the value of your property are also a sign of broker and mortgage fraud. Predatory Lending can also be inferred where clients did not have the opportunity to read their loan documents prior to signing, or when clients receive loan documents prepared in a language that they are not able to read.
Legal Options for Victims of Predatory Lending – Suing Your Lender
If you believe that you are the victim of Unfair Lending Practices, that does not necessarily means that your best option is a lawsuit against the lender and your broker. If your goal is to keep your house and simply receive more reasonable loan terms, often loan modification is the best option.
When you hire an attorney to file a lawsuit on your behalf, most attorneys require an up-front retainer payment of several thousand dollars and have high hourly billable rates. Many clients cannot afford the extensive cost of litigation. Beware of any law firm that tells you they can get the mortgage removed from your home! There are many scams making promises to homeowners. If it sounds too good to be true, it probably is.
If your goal is to keep your home, then the best result you can usually hope to get out of the litigation is a better loan at a more affordable rate than you currently have. Since this option is available through loan modification at a flat fee rate where you can keep attorney costs reasonable, it is almost always smarter to attempt loan modification before resorting to a lawsuit.
At this time, the Law Office of Kristy Hernandez does not take predatory lending lawsuits due to our high success rate with loan modification clients.