Spotting predatory mortgage lenders

If you’re trying to buy your first home, are elderly, have low income or bad credit, or if you need cash and want to refinance an existing mortgage, you’re a prime candidate for predatory lending.

Here are some of the signs that you could become a victim of a predatory lending scam:

“ You’re approached by a telemarketer or salesman who says that “bad credit is no problem” and guarantees a low-interest loan, but only if you apply immediately.

“You’re pressured to lie about your income or anything else to get the loan.

“There are high pre-payment penalties if you pay off the loan early. Predatory loans limit how quickly you can refinance and can charge you as much as six month’s interest as a penalty.

“You are being charged high fees with the loan. A fee of 1 percent of the loan is typical. Predatory is when the fees reach or exceed 5 percent of the loan.

“The price of the property is much more than for similar homes in your area.

“The interest rate seems much too high. You might be told that it’s because you have bad credit and only qualify for a “sub-prime” loan, and you’re pressured to accept that because “No one else will give you a loan.” Chances are that the extra interest is really a kickback to the loan broker.

“You go to closing and the terms on the documents are not what you expected. Somehow, the loan (usually the interest rate) has changed overnight.

“The biggie: The loan calls for mandatory arbitration — which essentially strips you of your legal rights in a dispute. By agreeing to this, you’re essentially waiving your rights to make a claim in a court of law. Binding mandatory arbitration means you agree to go to an arbitrator outside the court system and that you agree to whatever is decided. You’ll be at a disadvantage because these meetings are generally secret, and you’ll pay high fees to cover the arbitration costs.

If you’re a victim of predatory loan fraud, or if you need assistance in determining if a “deal” is a safe one, call the Department of Housing and Urban Development at 800-569-4287 and ask for a housing counselor in your area. Turn in scammers to your state’s Attorney General office and the Federal Trade Commission.