The Bhandhusavee Firm, PLC

- Attorney & Counselor at Law -

 

11811 North Tatum Boulevard, Suite 1051, Phoenix, Arizona 85028-1654  Telephone: (602) 678-2970  Facsimile: (602) 997-9807

 

 

Home Up Practice Areas Attorney Profile Consultations Representative Clients Articles Links & Resources Contact Us

 

 

 

Protect Yourself from Predatory Lenders

By U.S. Department of Housing and Urban Development

Buying or refinancing your home may be one of the most important and complex financial decisions you'll ever make. Many lenders, appraisers, and real estate professionals stand ready to help you get a nice home and a great loan. However, you need to understand the home buying process to be a smart consumer. Every year, misinformed homebuyers, often first-time purchasers or seniors, become victims of predatory lending or loan fraud.

Don't let this happen to you!

11 Tips On Being A Smart Consumer

  1. Before you buy a home, attend a homeownership education course offered by the U.S. Department of Housing and Urban Development (HUD)-approved, non-profit counseling agencies.
  2. Interview several real estate professionals (agents), and ask for and check references before you select one to help you buy or sell a home.
  3. Get information about the prices of other homes in the neighborhood. Don't be fooled into paying too much.
  4. Hire a properly qualified and licensed home inspector to carefully inspect the property before you are obligated to buy. Determine whether you or the seller is going to be responsible for paying for the repairs. If you have to pay for the repairs, determine whether or not you can afford to make them.
  5. Shop for a lender and compare costs. Be suspicious if anyone tries to steer you to just one lender.
  6. Do NOT let anyone persuade you to make a false statement on your loan application, such as overstating your income, the source of your downpayment, failing to disclose the nature and amount of your debts, or even how long you have been employed. When you apply for a mortgage loan, every piece of information that you submit must be accurate and complete. Lying on a mortgage application is fraud and may result in criminal penalties.
  7. Do NOT let anyone convince you to borrow more money than you know you can afford to repay. If you get behind on your payments, you risk losing your house and all of the money you put into your property.
  8. Never sign a blank document or a document containing blanks. If information is inserted by someone else after you have signed, you may still be bound to the terms of the contract. Insert "N/A" (i.e., not applicable) or cross through any blanks.
  9. Read everything carefully and ask questions. Do not sign anything that you don't understand. Before signing, have your contract and loan agreement reviewed by an attorney skilled in real estate law, consult with a trusted real estate professional or ask for help from a housing counselor with a HUD-approved agency. If you cannot afford an attorney, take your documents to the HUD-approved housing counseling agency near you to find out if they will review the documents or can refer you to an attorney who will help you for free or at low cost.
  10. Be suspicious when the cost of a home improvement goes up if you don't accept the contractor's financing.
  11. Be honest about your intention to occupy the house. Stating that you plan to live there when, in fact, you are not (because you intend to rent the house to someone else or fix it up and resell it) violates federal law and is a crime.

What is Predatory Lending?

In communities across America, people are losing their homes and their investments because of predatory lenders, appraisers, mortgage brokers and home improvement contractors who:

bulletSell properties for much more than they are worth using false appraisals.
bulletEncourage borrowers to lie about their income, expenses, or cash available for downpayments in order to get a loan.
bulletKnowingly lend more money than a borrower can afford to repay.
bulletCharge high interest rates to borrowers based on their race or national origin and not on their credit history.
bulletCharge fees for unnecessary or nonexistent products and services.
bulletPressure borrowers to accept higher-risk loans such as balloon loans, interest only payments, and steep pre-payment penalties.
bulletTarget vulnerable borrowers to cash-out refinances offers when they know borrowers are in need of cash due to medical, unemployment or debt problems.
bullet"Strip" homeowners' equity from their homes by convincing them to refinance again and again when there is no benefit to the borrower.
bulletUse high pressure sales tactics to sell home improvements and then finance them at high interest rates.

What Tactics Do Predators Use?

bulletA lender or investor tells you that they are your only chance of getting a loan or owning a home. You should be able to take your time to shop around and compare prices and houses.
bulletThe house you are buying costs a lot more than other homes in the neighborhood, but isn't any bigger or better.
bulletYou are asked to sign a sales contract or loan documents that are blank or that contain information which is not true.
bulletYou are told that the Federal Housing Administration insurance protects you against property defects or loan fraud - it does not.
bulletThe cost or loan terms at closing are not what you agreed to.
bulletYou are told that refinancing can solve your credit or money problems.
bulletYou are told that you can only get a good deal on a home improvement if you finance it with a particular lender.

Remember:

If a deal to buy, repair or refinance a house sounds too good to be true, it usually is!

Housing counselors working at HUD-approved agencies can help you be a smart consumer. To find a counselor near you, call (800) 569-4287 or go to HUD's housing counselors list online.

 

 

  [ Home ] [ Up ] [ Practice Areas ] [ Attorney Profile ] [ Consultations ] [ Representative Clients ] [ Articles ] [ Links & Resources ] [ Contact Us ]

Copyright © 2001-2008 The Bhandhusavee Firm, PLC

DISCLAIMER:  The information provided on The Bhandhusavee Firm, PLC web site is offered purely for informational purposes.   It is not intended to create or promote an attorney-client relationship, and does not constitute and should not be relied upon as legal advice.   It is not intended to seek professional employment in any state where lawyers in the firm are not admitted to practice, or in any state where this web site would not comply with applicable requirements concerning advertisements and solicitations.  We strive to make every attempt to keep this information current. We do not promise or guarantee, however, that the information is correct, complete or up-to-date, and internet subscribers and online readers should not act based upon this information without seeking professional counsel from an attorney admitted to practice in your location.   Transmission of information from The Bhandhusavee Firm, PLC web site is not intended to create, and its receipt does not constitute, an attorney-client relationship with The Bhandhusavee Firm, PLC or any of its individual attorneys or personnel.   If you elect to communicate with the firm, or any of its attorneys, through this web site, do not transmit any information about any matter (and particularly not any confidential information) that may involve you until the firm has agreed to represent you, and you have received confirmation of that fact in the form of a written engagement letter.