While the majority of mortgage lenders on the market today are reputable and legitimate, there unfortunately remains a segment of what are known as predatory lenders. These are individuals or companies who are not out for the mutual good of themselves and their clients, but rather who have the goal of convincing clients to sign up for loans that are highly costly and often trap them in long-term cycles of debt.
At Primary Residential Mortgage in Houston, we’re here to help. Not only do we offer numerous verifiable mortgage programs, from conventional to FHA loans and more, we also help with down payment assistance and numerous other areas – and we have the long-term client history and local reputation to back up everything we do, ensuring our clients are never at-risk of predatory loan concepts when working with us. However, if you’re shopping around various lenders, a totally normal part of the early mortgage process, you might run into some red flags with other companies that signal predatory tendencies – this two-part blog series will go over a number of such indicators to be very careful about, or even to use as a legitimate reason to never work with a given lender who you’re concerned is predatory.
Generally speaking, any mortgage lender who is rushing you through the steps of an application is not doing so for legitimate reasons. Any good loan officer will help you read through and understand the application and loan clauses, plus will encourage you to take the time to go over all the details yourself and confirm them.
If a lender doesn’t give you this time, or pressures you to sign documents without reading them, this is a major red flag. It often signals that they’re trying to slip something by you without your knowledge, and you should never comply – plus should strongly consider finding a new lender.
No Credit Check
Another major red flag is a lender who offers you a loan without checking your credit. There are many loans designed for those with lower credit, but how does a lender know if you need one of those without even checking? Walk away if this is what’s being offered to you.
In other cases, shady lenders will tell you to fake or misrepresent certain areas of information on the mortgage application, such as your income or debts. Simply put, doing this on a mortgage application is illegal and represents fraud, and any lender advising this is not to be trusted.
Another untrustworthy sign is a lender who sends you a contract or paperwork to sign with blank fields as part of the document. This gives a shady individual time to fill in details later after you’ve signed, then claim they’re legally binding. Rather, be sure every space on a loan contract has a value, even if that value is “N/A,” and that you have a complete copy of the contract at the time of your signature. If a lender won’t allow any part of this, walk away.
For more signs of a predatory lender you should watch out for, or to learn about any of our reputable mortgage loan services or mortgage rates, speak to the staff at Primary Residential Mortgage today.
*PRMI NMLS 3094. PRMI is an Equal Housing Lender. Some products and services may not be available in all states. Credit and collateral are subject to approval. Terms and conditions apply. Programs, rates, terms, and conditions are subject to change and are subject to borrower(s) qualification. This is not a commitment to lend. Opinions expressed are solely my own and do not express the views of my employer.