Mortgage Tips from Me to You

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					by: Seymore Hennigan

We have all heard the stories in the press about elderly people losing their homes due to unfair
lending practices. Most reputable banks would never consider bilking their customers out of their
life savings but there are many small, private lenders that would only be too happy at the
opportunity to do it. The act of lending money under conditions unfair to the borrower is referred
to predatory lending. Lets examine the finer points of predatory mortgage lending.

Predatory mortgage lending has become a major policy issue for financial institutions throughout
the nation. Nearly every federal financial services regulatory agency has denounced the practice,
and has attempted to address the problem by pressuring legislators to enact laws that protect
consumers from these fraudulent practices. Many states have enacted laws to protect their
citizens from unfair banking practices, in part due to the policy papers issued by the major
financial institutions

Predatory mortgage lending is characterized by the following: excessively high interest rates or
fees, abusive or unnecessary provisions with no benefit to the borrower, large prepayment
penalties, and underwriting that ignores the borrowers ability to repay the loan in question. As
the details and conditions of each financial transaction differ, high interest rates alone do not
constitute predatory lending. To qualify as predatory lending, the transaction must contain three
of the above stated conditions.

Many predatory lenders use fraudulent target marketing to identify their potential customers.
These unscrupulous financial institutions tend to concentrate on people that are lacking a sound
understanding of finance. Predatory lenders almost exclusively look for people with limited
education that are unable to grasp the finer details of their loan conditions. They also regularly
prey on the elderly, as they have limited incomes and significant equity in their homes.

If you or someone you know is considering borrowing for a mortgage, please take some time to
educate yourselves about the potential pitfalls. Always deal with reputable financial institutions.
If you have any concerns about the business practices of a particular financial institution, you can
always try investigating them at the "Better Business Bureau". If you are not comfortable doing
business with them, be sure that you do not sign anything. Take some time to speak with friends
or family, and try to do business with companies that they trust and have put their faith in. In this
day and age, it pays to be an educated consumer.

This article was posted on November 01, 2005

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