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...
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