Warning Signs of a Predatory Mortgage Loan


    Aggressive solicitations of targeted neighborhoods through fax, e-mails, flyers

    Door-to-door solicitation of home improvement or financing arranged by contractor or mobile home dealer

    Racial and ethnic steering to high rate lenders by real estate brokers

    Large fees or kickbacks promised to the mortgage broker


    Purposely structuring loans with payments the borrower cannot afford

    Falsifying loan applications (particularly income level)

    Making loans to mentally incapacitated homeowners

    Forged signatures (i.e, required disclosures)

    Adding insincere co-signers

    Shifting unsecured debt into mortgages

    Loans in excess of 100% loan-to-value

    Foreclosure rescue scams paying off low-rate mortgages

    Multiple good faith estimates of closing costs

    Changing the loan terms at closing


    High interest rate

    High fees and closing costs

    Balloon payments

    Negative amortization

    High appraisal costs

    Inflated appraisal

    Padded recording fees

    Back-dating of documents

    Charging for duplicative services

    Requiring credit insurance

    Mandatory arbitration clauses

    Making an unaffordable loan based on the value of the property

    Falsely identifying the loan as a line of credit or a business loan


    Rushed loan closing

    Terms at closing different what the borrowers thought they would get

    Back-dating of documents or presentation of blank documents, especially the Notice of Right to Cancel

    Failing to give your client copies of the documents at the closing


    Failure to pay off debts as indicated in loan papers

    Flipping (repeated financing, often after high-pressure sales)

    Excessive late fees (including daily interest) and other servicing charges

    Incomplete or inadequate home improvement work

    Shoddy installation of the manufactured home