How Mainers Can Avoid Predatory Lenders and Mortgage Financing Scams

As Americans enjoy record homeownership, some scam artists are trying to take advantage of consumers through deceptive advertising and misleading practices, including offering unnecessary financial products and services and charging excessive or hidden fees. In some instances, victims can lose most or all of the equity they have built up in their home over the years.

The following are tips to consumers to protect themselves against predatory lenders and mortgage financing scams:

- Walk away from anyone suggesting that you lie on your mortgage application (e.g., encouraging you to inflate your income, exaggerate your work history, etc.).

- Don't sign any blank mortgage documents or any that are incomplete.

- Don't borrow more than you can afford and beware of those who try to get you to borrow more.

- Beware of door-to-door salesmen, telemarketers, or internet ads. These are scam artists' favorite sales techniques.

- Don't give in to high-pressure salesmen. No reputable broker or lender will try to pressure you to take out a loan.

- Don't use lenders who want you to refinance your mortgage over and over again in a short period of time (charging you higher fees, points, interest rates, and prepayment penalties each time).

- Be sure you know the terms of your loan. Loans with low monthly payments probably include a balloon payment - i.e., the remaining principal must be paid in full at the end of the loan term.

- Beware of lenders who charge excessive fees and prepayment penalties. Predatory lenders often charge hidden fees.

- Beware of borrowing though a home-improvement contractor, particularly those who want you to use a specific lender they recommend. They're likely to charge you a higher interest rate and may even fail to follow through on the work they promise.

- Avoid lenders who include additional products or services in the loan as a condition for qualifying for the loan.

- A mortgage broker must notify you of the closing costs within three business days. If you have not received the closing costs within that time, then take your business elsewhere.

- Do not sign a contract with a mortgage company until you've seen a lock-in sheet and are comfortable with the Good Faith Estimate (GFE) that the lender provided to you. If you are uncomfortable with it, go somewhere else.

- If you're considering purchasing a home or borrowing against your home equity, ask friends or family about a reputable broker or lender who can help you. You also can use the "Find a NAMB Broker" link on the National Association of Mortgage Brokers home page, www.namb.org, to find a NAMB member, who must adhere to best lending practices and a stringent ethical code.

- Professional mortgage brokers charge rates and fees that do not vary based on race, religion, national origin, gender, marital status, age, or receipt of income from public assistance programs.

- Don't take out any loan you don't fully understand or aren't completely comfortable with. you are not obligated to a mortgage company at any time unless you have signed a contract stating that you must use their services.

Vanguard Mortgage is very concerned about the serious crime of mortgage lending fraud. If you feel you have witnessed suspicious activity, or are a victim, visit the Home Buyers page on the NAMB Web site at www.namb.org and click on the link to the FBI's Internet Fraud Complaint Center.