What is a Predatory Lender?

Several months ago, the 3,000-member California Association of Mortgage Brokers (CAMB) created the first real definition to describe the abusive lending practices of predatory lenders. According to the CAMB, predatory lending was described as "placing consumers in loan products with significantly worse terms and/or higher costs than loans offered to similarly qualified consumers in the region for the primary purpose of enriching the originator and with little or no regard for the costs to the consumer."

Most mortgage brokers provide good service to their clients, yet there are a few who use unethical practices. Those brokers, called "predatory lenders" by the CAMB, not only over-charge consumers, but they also get paid in other hidden ways.

For instance, avoid lenders who charge more than the usual three percent fees for a conventional loan or four percent fees for a government-sponsored loan. Even non-prime lenders can't justify excessive fees.

Also watch for hidden loan costs, such as the Yield-Spread Premium. This term refers to a rebate that's given to brokers when they place a borrower at an interest rate higher than the rate for which they qualify. Refuse to pay yield-spread premiums and unwarranted fees, and avoid brokers who include these charges in their loans.

Besides charging high points and fees, predatory lending practices may also include such things as "packing" credit insurance on to a loan, making mortgage loans to homeowners who don't have the income to repay them, and repeatedly refinancing loans.

When it comes to obtaining a real estate loan, it's your responsibility to become a knowledgeable consumer, which means you'll need to keep asking questions of your lender. If you aren't able to get clear, easily understandable answers to your questions, it's possible that you may be dealing with a predatory lender.

Jeanette Fisher, author of "Credit Help! Get the Credit You Need to Buy Real Estate," helps people buy their dream home or finance multiple investment properties. Jeanette teaches real estate investing and Design Psychology. For help with your credit or answers to your questions, visit the Real Estate Help Credit Center at http://www.recredithelp.com Subscribe to Credit Help! Tips. Send a blank email to CreditTips at reCreditHelp.com

Get the credit you need to buy your dream home or multiple investment properties!

MORE RESOURCES:

RELATED ARTICLES

Refinance Rental Property - Dont Sell It
You own a rental property for years, and never see the "big pay-off." Is it time to cash in on your investment, now that you've paid down the mortgage, and values are up? Maybe not.

Real Estate Investing Requires Education
I really believe in getting an education in real estate investing, especially before launching a real estate investing career. I have been investing in real estate for 25 years, but I still spend thousands of dollars each year to learn more about real estate investing.

For Sale By Owner: The Inside Scoop On Selling Your Own Home
If you're thinking about selling your home perhaps the 'for sale by owner' signs posted on neighborhood lawns have intrigued you. When you browse the newspaper listings you see ad after ad boasting 'for sale by owner' as an added incentive for buyers and you envy the owners that are confident enough to try it.

I have a buyer for your property and I can sell it now!
A Realtor has just talked to you and said, "I have a buyer for your property and I can sell it now; perhaps for more money than the price your current real estate agent has it listed for." Have you heard this or a version of this? Or, "I have a buyer for your property and I can sell it now; for Big Bucks (with an incredibly high figure named) perhaps for more money than that.

If You Cant Afford to Retire...Move
According to Warren Bland, PhD, an award-winning author and geographer at Cal State, people have a great option. It's called "equity-take" that is, the difference in cost of comparable housing between your present community and the more affordable one to which you could move.

Evil Gains Entry
When we open our doors to strangers, we can never be certain what malice an outsider might bring in. Police officers tell us to keep our doors locked with good reason.

Victorian. Modern. Colonial. What's Your Architectural Style?
You are attracted to a home for more than its number of bedrooms and square footage. Whether consciously or subconsciously, you are drawn to the individual character of a home.

Master Builders Ask, Do You Know What Design/Build or Design/Construct Means? You Should
These real questions are answered by me and US Master Builders after receiving them from readers of my e-book, "Residential Development Made Easy."Question 1.

Be Patient Screening Tenants
Rental real estate is a solid way to make money. I'm particularly fond of residential properties, because people have to live somewhere.

7 Different Ways Anyone Can Become a Real Estate Investor
Being a real estate investor is not really that hard, Sometimes you do not need any money down. Other times you do not need any of your own money down.

Writing on the Wall - Are REITs a Better Investment for You?
When I was a young child I had many annoying tendencies. My mother explained to me that the most annoying was my need to write on the walls of every room.

Real Estate Professional in the Palm of Your Hand
GETTING THE MOST FOR THE LEASE-TRACKING YOUR REAL ESTATEIf you own rentals and/or investment properties, you know that you have to keep track of your portfolio, maintenance profiles, property managers, and related financial matters. There are a multitude of programs for the Palm-Pilot system to keep up with lease dates, lease expirations, and rent due dates.

The Art & Science of Property Valuation -- Automated Valuation Models
It is no secret that sellers want to sell high and buyers want to buy low. But they often arrive at the negotiating table with very different ideas on price.

11 Different Ways to Participate in The New Millennium Real State Boom
Many parts of the country are going through a real estate boom. In recent reports real estate is showing double digit growth in many parts of the country.

Home Inspection Checklist - Home Inspectors
Although architectural details, wall and floor coverings, modern conveniences and many other factors are important in the buying decision, the focus of this inspection is on the structural/mechanical/electrical condition of the property.The inspection is designed to give the real estate agent or prospective purchaser a system to detect some of the readily accessible major flaws or deficiencies in the significant components and systems of a home.

Where To Start In Looking For A Central Illinois Realtor
Central Illinois is an excellent location for families and businesses. Property values and local economies are growing constantly and the wide range of available properties is impressive.

Fixer Uppers: Dont Make This Mistake
Making money with "fixer-uppers" isn't about repairing drywall or planting flowers. It's about using the right approach from the start.

How To Find Your Dream Home In Belize
Shopping for property in Belize is not as simple an undertaking as you might initially expect!Firstly, estate agents as we know them are non existent! Real estate brokers that do exist are likely to be unlicensed, unregulated and certainly not trained or insured.Secondly, the majority (and I mean the majority) of property for sale is not advertised!But with property prices remaining affordable, the quality of property available attractive, the climate beautiful, the people welcoming, the quality of life incredible and the opportunities in Belize plentiful, more and more people need to know HOW they can go about procuring themselves their dream home in Belize.

Fixtures
Fixtures, related to real estate, are items that were originally personal property but are now attached to the property itself. This becomes the toughest issue when tenants attach fixtures to a property.

Real Estate Values or Just Bad Habits
There are several small businesses that retain hundred year old traditions. Hand-dipped chocolates, fresh flowers and cloth napkins on every table in a restaurant, or mints and roses on a guest's pillow at a B&B.