U.S. Department of Housing and Urban Development: Office of Housing [Vea la version en
espanol de esta pagina] [Search/Index]
Don't Be A Victim Of Loan Fraud
Protect Yourself from Predatory Lenders
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 down payment, 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:
. Sell properties for much more than they are worth using false appraisals.
. Encourage borrowers to lie about their income, expenses, or cash available for
down-payments in order to get a
loan.
http://www.hud.gov/utilities/textonly.cfm?address=http://www.hud.gov/
offices/hsg/sfh/buying/loanfr
. Knowingly lend more money than a borrower can afford to repay.
. Charge high interest rates to borrowers based on their race or national origin and
not on their credit history.
. Charge fees for unnecessary or nonexistent products and services.
. Pressure borrowers to accept higher-risk loans such as balloon loans, interest only
payments, and steep pre
payment penalties.
. Target vulnerable borrowers to cash-out refinances offers when they know borrowers
are in need of cash due to
medical, unemployment or debt problems.
. "Strip" homeowners' equity from their homes by convincing them to refinance again
and again when there is no
benefit to the borrower.
. Use high-pressure sales tactics to sell home improvements and then finance them at
high interest rates.
What Tactics Do Predators Use?
. A 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. . The house you
are buying costs a lot more than other homes in the neighborhood, but isn't any bigger
or better. . You are asked to sign a sales contract or loan documents that are blank
or that contain information, which is not
true.
. You are told that the Federal Housing Administration insurance protects you against
property defects or loan fraud
it does not.
. The cost or loan terms at closing are not what you agreed to.
. You are told that refinancing can solve your credit or money problems.
. You 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.
Information by State Print version
Email this to a friend
Want More Information?
- Brochure Version
- Fact Sheet
Housing
About Housing
Contact us
Keywords
- - Single Family
- - Audience groups
- - Buying a home
- - Events_& Training
- - FHA insured loans
- - Common questions
http://www.hud.gov/utilities/textonly.cfm?address=http://www.hud.gov/offices/hsg/sfb/buying/loanfr
HUD - Don't Be A Victim of Loan Fraud
Page 3 of 3
- - Housing counseling - - - HUD homes/ REO
- - Owning a home
- - Refinance- guide
- - Regulatory programs Hospitals
Multifamily
OMHAR
Reading room
Online forums
Work online
HUD news
Homes
Communities
Working with HUD
Tools
Let's talk
Web casts
Mailing lists
Contact us
Help
[FirstGo'l: Your First Click for the U.S. Government]
Content updated August 18, 2003 Follow this link to go back to top
---------
[logo: HUD seal] U.S. Department of Housing and Urban Development 451 7th Street S.W.,
Washington, DC 20410
Telephone: (202) 708-1112 TTY: (202) 708-1455
Find the address of a HUD office near you
[logo: Fair housing and Equal Opportunity] Privacy Policy
Home
http://www.hud.gov/utilities/textonlv.cfm? address=http://www.hud.gov/
offices/hsg/sfh/buving/loanfr
---
To stop further mailings or to change your details visit:
http://getresponse.com/r?y=NDQxNDc2L25lbGF5YW5faW5kb0BzZXRpby5uZXQvMzAv
------------------------ Yahoo! Groups Sponsor --------------------~-->
$9.95 domain names from Yahoo!. Register anything.
http://us.click.yahoo.com/J8kdrA/y20IAA/yQLSAA/BCfwlB/TM
--------------------------------------------------------------------~->
<a href=http://English-12948197573.SpamPoison.com>Fight Spam! Click Here!</a>
Yahoo! Groups Links
<*> To visit your group on the web, go to:
http://groups.yahoo.com/group/kumpulan/
<*> To unsubscribe from this group, send an email to:
[EMAIL PROTECTED]
<*> Your use of Yahoo! Groups is subject to:
http://docs.yahoo.com/info/terms/
