Use a lender you know and trust. An
unscrupulous lender may attempt one of these
This is a practice where loans are made to
consumers without regard to the borrower’s
ability to pay. For instance, an unscrupulous
lender may encourage you to overstate your
income on the loan application in order to get the
loan approved, knowing you will not have the
income to cover the monthly payments. You
may also be encouraged to borrow more than
you need so you will have extra spending money.
As soon as you default on the loan, the lender
will foreclose, taking your home and the equity in
A lender convinces you to refinance your home.
You agree and make a few payments on the new
loan. The lender then approaches you offering a
bigger loan for something such as a “dream
vacation.” When you accept the new offer, the
lender refinances the original loan, lending
additional money. In doing so, you are charged
high points and fees and an increased interest
rate for each refinancing. You’ll also have to pay
any prepayment penalties each time. The result
is more debt over a longer period of time.
A contractor offers to do some work on your
home, saying he can also arrange the financing
through a lender. Once you agree, the
contractor begins work. The lender then appears
with papers to sign. He may rush you into signing
a document before you have time to read it, or
the contractor may threaten to stop working until
the papers are signed. You sign, only later
realizing you’ve just agreed to a home equity
loan with high rates, points and fees.
Additionally, the contractor now has no interest
in finishing the job, since he has already gotten
paid by the lender.
Signing Over the Deed
You can’t pay your mortgage and face
foreclosure. A “lender” contacts you, offering
help. First, the lender requires you deed the
property to him, claiming this is a temporary
safety measure to prevent foreclosure. It is not.
Once the lender has the deed, h