What is Predatory Lending?

Predatory lending is a term used to describe a wide range of unfair financial practices. Lenders, mortgage brokers, home inspectors, appraisers, builders, accountants and title companies can be the perpetrators in predatory lending and loan fraud. Since the subprime crisis, borrowers have filed hundreds of federal lawsuits - many of which allege predatory lending and loan fraud.

Although predatory lending and loan fraud cover a wide rage of scenarios, and what constitutes these acts varies from state to state, the following examples will help you determine whether you have been a victim of predatory lending or loan fraud.

Predatory lending or loan fraud may exists if you answer yes to any of these questions:

* Was your property was sold for much more than it was worth using a false appraisal? If the house you purchased costs a lot more than other homes in the neighborhood, but isn't any bigger or better, you may be a victim.

* Were you encouraged to lie about income, expenses, or cash available for down payments in order to get a loan?

* Did you sign a sales contract or loan documents that were blank or contained information that is not true?

* Did your lender knowingly lend more money than you can afford to repay.

* Were you charged high interest rates based on your race or national origin and not on your credit history?

* Were you charged fees for unnecessary or nonexistent products and services?

* Was the cost of your property or loan terms at closing different from what you agreed to?

* Were you pressured to accept higher-risk loans such as balloon loans, interest only payments, and steep pre-payment penalties?

* Were you, as a vulnerable borrower, targeted for cash-out refinance offers when you were in need of cash due to medical, unemployment or debt problems?

* Was your home equity "stripped” because you were convinced to refinance again and again when there was no benefit to you?

* Were high-pressure sales tactics used to sell you home improvements with high interest rate financing? Were you told that you can only get a good deal on a home improvement if you finance with a particular lender?

How can Mortgage Modification Group help if I think I am a victim of predatory lending of loan fraud?

Debt To Income Ratio

As part of our financial analysis, we are able to determine your Debt To Income Ratio (“DTI”). DTI is the percentage of your income that goes toward paying your debt. This is important because most lenders require a maximum of a 50% debt to income ratio to lend to a consumer. Prior to the mortgage meltdown of 2006, many banks, brokers and borrowers overstated income to meet DTI ratio requirements. It is not uncommon for borrowers to have ratios that far exceed this. In some cases, DTI is so overstated that it sets grounds for legal action. We expose this issue to your lender and support our claim by the numbers. The fact is that banks are accountable to the loans they make. We use this data as negotiating power to obtain a rate modification on your behalf.

Loan To Value Ratio

Also as part of our financial analysis, we help you determine your Loan To Value ratio (“LTV”). LTV shows the relationship between the amount borrowed and the appraised value of a property. Is your home maxed out in equity? If it is, you have leverage in negotiating a modification. Why? Because the lender knows that if they foreclose on the property, they will inherit a 100% looser.

How do I know if I am a good candidate to pursue legal action against my lender for predatory lending or loan fraud?

Under federal laws, namely the Truth in Lending Act (“TILA”) and the Real Estate Settlement Procedures Act (“RESPA”), loan originators and assignees may be held liable for failure to make required disclosures. Legal remedies for violations may include rescission, damages and equitable relief.

Even if your mortgage has been sold to a servicing company, the new lender is subject to the same rescission claims as the original lender. A borrower who is successful in rescinding their loan is entitled to a refund of all amounts paid to the mortgagee (including points, interest, insurance premiums and any principle paid, attorney’s fees) and release of the mortgagee's security interest on the mortgaged property.

If you believe that you have been a victim of predatory lending or loan fraud, we offer mortgage auditing services through our marketing partner. A mortgage audit is a comprehensive examination of your loan documents in search of violations of federal laws and your state’s laws. The initial audit is free. If it appears that you have a strong case, then you may choose to proceed with a documented forensic audit. Please ask us to help you get started with a mortgage audit today.