Predatory Lending Through Loan Steering
Below is a MRR and PLR article in category Finance -> subcategory Loans.
Predatory Lending Through Loan Steering
Predatory lending can trap unsuspecting borrowers, particularly through a tactic known as "loan steering." This can lead you to expensive loans that may jeopardize your home.
Understanding Loan Steering
In recent years, the real estate market has seen a surge, leading to an increase in predatory lending practices. Predatory lending involves offering loans at higher costs than necessary, often under the guise of legitimate deals by unethical lenders or their agents.
How Loan Steering Works
1. Deceptive Denials: An agent might inform you that you don’t qualify for a mortgage. They may even suggest that other major lenders will also reject you.
2. False Assurance: The agent then claims to know a lender who can secure a loan for you, steering you towards a costly loan.
3. Costly Terms: This redirected loan often comes with high interest rates, exorbitant closing costs, and prepayment penalties, making it difficult to refinance.
The Real Motive
These predatory lenders may be targeting your property. By offering unaffordable loans, they anticipate a potential default, allowing them to seize your home through foreclosure. The property is then sold for a profit, benefiting both the lender and the agent, while you are left with damaged credit and homelessness.
Targeted Demographics
Loan steering is prevalent in communities where buyers are less likely to qualify for loans from major lenders due to poor credit or low income. Predators exploit those who are unaware or feel out of options.
Protect Yourself
If your loan application is denied and you're told that no other lender would approve you, be wary if you’re then referred to another lender. Instead, take the initiative to explore other lending options independently to avoid falling into a predatory lending trap.
Stay informed and vigilant to safeguard your financial future and your home.
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