6 Clues a Lender is a Predator

Help your new or refinancing clients protect themselves by making them aware of activities that might indicate a predatory lending practice.

Here are some tips from the NAR brochure "Are You Having Trouble Paying Your Mortgage?"

Excessive service fees. Lender fees of 1 percent are common on many mortgages — significantly higher percentages may be a red flag.

Teaser rates and balloon payments. Borrowers must understand what their payments will be when the rate is raised.

Delayed closing. Unscrupulous lenders may delay a closing so that a more favorable loan rates expires.

Overinflated appraisals. Higher values allow for higher fees to the lender and added cost to the borrower.

Prepayment penalties and other barriers to refinancing. Penalties for prepayment try to make it too costly for borrowers to get another loan at a more favorable rate.

Unexpected settlement costs that make the fees charged at closing significantly higher than those disclosed earlier.