PREDATORY LENDING CHECKLIST
Warning Signs of a Predatory Mortgage Loan
- The Marketing of Mortgage Loans
¯ 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
- The Sale of Mortgage Loans
¯ 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
- The Loan
¯ 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
- The Closing
¯ 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
- After 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