Do You Have A Predatory Loan?
- Loan charges were not disclosed to you in a clear, conspicuous, and accurate way.
- Terms of the mortgage changed to your disadvantage at the last minute before closing.
- You were charged high closing costs (points and fees) including Yield Spread Premiums.
- Your loan contains a prepayment penalty.
- You were asked to sign blank forms.
- You did not get copies of "all" loan documents.
- If you have an adjustable rate mortgage are adjustments accurately worked out?
- Were you told “Don’t worry you can refinance in six months.”
- Were you talked into a “Negative Amortization Loan or an Interest Only Loan and the Balance Keeps Going UP?”
- You were put into a loan not as good as than the one you replaced.
- Is your house now worth less than the outstanding mortgage balance?
The Law is on Your Side
The Truth In Lending Act ("TILA") and the Real Estate Settlement Procedures Act ("RESPA"), as well state laws, require that creditors disclose certain terms of the loan to the borrower. When those terms are not disclosed or are inaccurately disclosed, these laws provide severe monetary penalties against these creditors. These laws are meant to help people get out of violation and fraud ridden mortgage contracts.
| Loans That May Be Considered Predatory |
Negative Amortization Loan
A negative amortization is a loan where the payment is less than the interest charged so that the outstanding balance of the loan increases. The shorted amount (difference between interest and repayment) is then added to the total amount owed to the lender.
Over time you will owe more than the property is worth.
I-O mortgage payment?
Most mortgages that offer an I-O payment plan have adjustable interest rates which mean that the interest rate and monthly payment will change over the term of the loan. The changes may be as often as once a month depending on the terms of your loan. For example, a 2/1 ARM has a fixed interest rate for the first 2 years; after that, the rate can change once a year (the "1" in 2/1) during the rest of the loan.
Exploding ARM
Predatory loans make up 70% of the subprime market. The loan has a very low teaser interest rate for the first two year and then jumps exponentially, often 30-50% more, also called an exploding ARM.
       
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