esm7i The tips come from HUD (the U.S. Department of Housing and Urban Development). Here are 11 tips to help you be a more intelligent consumer and avoid loan fraud.
Predatory lenders can take on many different forms, and they prey upon people at any stage of home ownership.
False appraisals are used to defraud new homeowners into paying more for their property than the value of it. They encourage borrowers to fabricate financial data to obtain a loan, then lend them more money than they can pay back before selling it to a third party.
When homeowners are at risk due to medical issues or unemployment, they target them with cash-out offers. The predatory lenders also take away homeowners’ equity when they get them to refinance multiple times, even though this only benefits the predatory lenders.
They will then show up at the time of foreclosure and use high-pressure tactics and false promises to exploit those desperate to save their home.
Credit.org wants to help people avoid being victims of predatory lending. We are a HUD-approved housing counseling agency proud to be part of HUD’s “Keep Your Home, know Your Loan” campaign. Here are 11 tips from the U.S. Department of Housing and Urban Development for smart consumers:
Attend a non-profit, HUD-approved homeownership course before you purchase a house.
Ask for references and interview several real estate agents before selecting one to assist you in buying or selling a house.
Do some research on the other houses in your neighborhood. Do not be fooled by the price of other homes in your neighborhood.
Before you buy, hire a home inspector who is licensed and properly qualified to inspect the property. Decide if you or the seller will be responsible for paying the repair costs. Determine if you can afford the repairs if you are responsible for paying them.
Compare lenders and costs. Do not trust anyone who tries to direct you to a single lender.
Don’t let anyone convince you to lie on your loan application. For example, you should not overstate your income or the source of the downpayment. You also shouldn’t fail to disclose your debts, amount, or type. Each piece of information you provide when applying for a home loan must be complete and accurate. Fraud is possible if you lie on your mortgage application.
Don’t let anyone convince you to borrow more than you can afford. You could lose your home and your invested money if you fall behind on payments.
Signing a blank or blanked document is never a good idea. The contract terms may bind you if someone inserts information after you sign. Enter “N/A,” i.e., not applicable, or cross out any blanks.
Ask questions and read everything carefully. You should not sign anything you do not understand. Ask a real estate expert or a housing counselor at a HUD-approved agency for assistance before signing. You can take your documents to a HUD-approved agency to see if it will review them or refer you to a lawyer who will assist you at no cost or for free.
If you refuse the contractor’s financing, be suspicious if the price of an improvement increases.
Honesty is the best policy when it comes to your intentions. Declaring that you will live in the house when you do not is illegal and violates federal laws.
