If you obtained a mortgage through another lender or broker, but are now wondering, “Is my mortgage on the up and up?” there are a few steps you can take to determine if you were a victim of predatory lending.

Predatory lending was running rampant back in 2003 through 2007, when borrowers would encounter lenders who provided them with “drive through, sub prime mortgages.” These were loans that were granted based on the borrower presenting little more than a driver’s license. No or little documentation was required and mortgages were being given out as freely as lollipops at the dentist’s office.

During that time, AmeriFirst stuck to its solid lending practices and always employed traditional lending practices. Our customers can feel reassured that their mortgage loan is solid and fair.

However, those who didn’t finance through AmeriFirst or another reputable lending institution are concerned and are considering refinancing their loan through a solid lender.

Worried you are a victim on predatory lending? Ask these questions when examining your current mortgage*:

• Did you furnish traditional, required documentation to obtain the loan? Approximately half of all sub-prime borrowers between 2003 through 2007 were granted “stated income loans.” This means that the applicant didn’t have to provide actual documentation or proof of income, but simply state on a document that they earned a certain amount of money. Typically these statements were unverified and the borrower was granted the loan.
• Do you have an interest only or pick a payment type mortgage? These were popular during the mortgage boom, however now are proving to be a slippery slope. This is when the borrower pays only the interest on the loan or another minimum payment. None of the money goes toward the principal and after a certain time period the amount is increased; typically leaving the borrower unable to make the higher payment.
• Does your mortgage have negative amortization? This happens when the monthly mortgage payment doesn’t cover the interest. The loan balance increases over the years, and even though payments are being made you end up owing more on your home loan than when you originally purchased it.

Other areas to consider is whether you are able to carry a mortgage loan with an ARM and if you are simply struggling to make payments on a loan you don’t understand. In most cases with predatory lending, the lender did not furnish the legal documents such as Truth in Lending to the borrower which is misleading.

If you are simply unsure if you are in a bad mortgage position, contact the mortgage professionals at AmeriFirst for a full mortgage loan analysis. Our loan officers have been in the business for more than 20 years so we know what to look for and how to get you on the right path. Call us today at 800-466-5626—we can help.

Source: Arcia Omar, ESQ. Foreclosure Defense and Consumer Bankruptcy Attorney, “How You an Tell If Your Have Been a Victim of Predatory Lending Practices.” Davie Living Magazine. August 2010.