If you are forced into abusive or unfair lending terms, you are a victim of predatory lending. If you think you are paying high interest rates, unreasonable penalties or hidden fees, you are probably a victim. Most contracts are putting borrowers under financial stress and can traced to have some form of predatory lending and most of them are impossible to get out of.

Are you a victim?

Borrowers usually have no clue that their mortgage contract is predatory until things get out of control and they are forced into foreclosure. What you can do is carefully read your contract. Be warned that most predatory mortgages are very subtle and it may be difficult for you to see whether you are the losing party of that deal. The faster you can recognize whether you are a victim or not, the earlier you can take action.

Here are some tips for you to determine whether you are a victim of predatory lending or not.

Excessive fees. Fees are sometimes not directly affected by the interest rate and thus easy to manipulate and disguise. Add up all your fees and see if the sum is below 1% of your loan. If it is more than 5%, get suspicious.

Repayment penalties. Commonly, lenders charges you a penalty if you pay off your loan in advance to make up for the interest that they lose. If the penalty is worth more than six months of interest, it is considered abusive.

Yield Spread Premiums. This is a fee from a lender to a loan broker paid when the broker arranges a loan where the interest rate on the loan is inflated to an amount higher than the “par” rate. If you see this on your bill or contract, you are most likely paying much more than it is legally acceptable.

Refinancing offers. Think twice before a lender offers you a refinance package. It may be a common practice of loan flipping to generate income without giving you any substantial benefits.

Mandatory arbitration. Predatory practices use this as a provision to ban you from going to court if you find the contract to be abusive. Basically, you are being denied of your rights to justice.

Know your rights

The Real Estate Settlement Procedures Acts (RESPA) and the Truth in Lending Act (TILA) were put in place to protect borrowers. However, lenders still violate them and trick millions of people out of their money. Know these laws and you will know your rights.

If you are suspicious about vague or overly high charges, ask your lender for explanation. Even if they don’t give you a useful answer, they are now aware that you cannot be fooled.

You can correct and change your situation to save your home even if you are already in foreclosure. A competent lawyer will help you look for RESPA and TILA violations in your contract and most of the time the laws will help stop foreclosure and even pay you back for damages.

What you can do

A simple method to restructure your loan and help you stop foreclosure is getting a loan modification. Call a loan modification attorney, who specializes in talking to lenders and negotiating your mortgage. You will be asked to provide documents to help them assess your case properly. Sometimes they will ask for a hardship letter explaining them about your situation. Violations by lenders, such as misleading disclosures, excessive fees or other violations mentioned above in this article, will be used by Loan Modification attorneys to negotiate better settlement. You will be surprised to know that almost every mortgage has at least one violation but since these violations are very subtle, you need a very good understanding of the law to be able to find them.

When the loan modification is approved by your lenders, you will be receiving a document detailing the mortgage modification. If you approve it, you will be able to keep your home and start paying off your mortgage at a more comfortable pace.

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