Mortgage Loans - The Top Predatory Red Flags
By Jack Krohn

The sub prime market for home mortgages is a hot bed of predatory practices. These types of lenders prey on the elderly, borrowers with poor credit who have few options, and less educated and non English speaking customers. They give the entire industry in general and other good sub prime lenders more specifically a bad name.
A" Perfect Storm" of lax oversight, a down market, and hungry investors makes the perfect environment for predatory lending practices. And there are plenty of takers thanks to the aggressive marketing practices of some lenders.
Here are some of the top red flag warning signs for these lenders.
1.MONEY UPFRONT--Definitely a no-no. If someone asks for money upfront RUN don't walk out the door. Know the difference between this and a legitimate application fee.
2.ARM'S--Beware if an Adjustable Rate Mortgage is the only option offered.
3.BALLOON PAYMENT--Balloon's are for small kids not homeowners. They are too risky especially for Sub Prime Borrowers.
4.TOO BIG A LOAN--Be wary of a lender is trying to sell you on a loan that is bigger than you need.
5.HIGH INTEREST RATE--If the rate seems too high like more than 5 points over prime-keep shopping.
6.FREE VACATIONS--If the loan is a good one, you should need no incentive to take it. Only when it is questionable might there be a "vacation" thrown in for you to do the deal.
7. PRESSURE TACTICS--Any kind of pressure is a bad sign. For example to sign papers now, sign blank papers or to falsify an application are all cases where you need to leave and find another lender.
8.ASSET ORIENTED LENDER--If the lender is more interested in the house as an asset than where the money is coming from to pay the mortgage he is more than likely looking for a foreclosure more than making a loan.
These are some of the top red flag warning signs of a predatory loan/lender. There are others to be sure. For sub prime borrowers, the market is rife with predators looking for an easy mark. Don't be their next victim.
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Jack Krohn is a leading free lance writer on Home Equity and Mortgage issues with over 35 articles to his credit. He is also the #1 author of Home Security Articles in the country according to Ezine Articles.


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