Mar. 14, 2010

Real Estate Fraud: Loan Servicing

Loan Servicing Fraud is the main theme of my next article from the real estate fraud series! Do you want to know what it is, how to spot it and what to do to protect yourself? If yes, continue reading.

Loan Servicing Fraud only occurs when you obtain a loan from someone who is dishonest and has questionable practices. Subprime lending is very often connected to this kind of fraud. Naturally, unexperienced, first time lenders are threatened the most.

Simply said , after signing all the documents (thus almost unable to change the situation), the borrowers might find out that they need to pay higher monthly payments than they originally agreed on. The unexpected fees in the monthly payments are for, for example, insurance or some legal operations etc. Another instance is that a person applying for a mortgage loan is offered some, very good, interest rate they are happy about. After having all the needed papers organized and ready, or maybe after doing something around the wanted home, some lenders might just make the borrowers accept higher, less convenient rates than they applied for in the beginning. As the borrower is under pressure, they many times agree, since they are worried they might lose the loan.

Thus you all need to be very careful with your lender. The best is to have one, whom someone you know already has (positive) experience with. Such lenders therefore already passed the test of people the opinion of whom is important for you. In case there is no such lender, you ought to look out for out the one you have found and examine them. Internet is your friend in such cases - you can find some references about your lender, try it. If many people complain about them, just get a new one as soon as possible. A good, honest lender should provide you with documents clearly declaring the amount of the loan together with all the additional fees you may have to pay in the future.

All the payments should be included in the documents right in the beginning, so go through all of them carefully. Question? If you have some, ask your loan officer - do not be afraid and keep asking until you understand everything well. When you think the situation is clear enough, check out the papers you got once more, just to ensure all the info is correct. If it is, it is perfectly fine and safe to sign everything.

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