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Kia Franklin

Seniors Prime Victims of Subprime Loans

Quoted in the Seattle Times, attorney Melissa Huelsman said: "You can't take away a house with a gun, but you can take it away with a piece of paper... "We, as a society, should treat that as a serious crime."

A Seattle investigation shows that homeowners, and especially older homeowners, are prime targets of predatory lending. It's not just about first-time homebuyers. A three article series in the Times highlights the story of a 96-year-old woman with over $2 million in assets who was cheated out of house, home, and apartment buildings.

Here are the articles: Homeowners in debt, seniors prime targets of riskiest loans, The Fleecing of Frances Taylor, and Investigation reveals exploitation of the vulnerable.

As lawmakers grapple with this problem, surprise surprise, mortgage-industry reps are pushing back against any increase in regulation. Individuals who've been scammed by this practice are turning to private attorneys who can investigate whether subprime customers have been taken advantage of and take predatory lenders to court on behalf of these borrowers.

Kia Franklin: Author Bio | Other Posts
Posted at 9:16 AM, Dec 03, 2007 in Consumer Rights | Predatory Lending
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Comments

I am a former senior loan officer for a regional mortgage bank. It made me sick to see how we took advantage of consumers for thousands of extra dollars. Sometimes these were smart people who simply didn’t know any better. So I developed this simple Mortgage Loan Comparison Worksheet. If borrowers just used this easy tool when shopping for a mortgage, predatory lending in this country could virtually be eradicated:

http://www.januspresentations.com/MortgageLoanComparisonWorksheet.pdf

Problem is, most borrowers only make a decision once every seven years, so how would they even know what to look for? As a loan officer my mission was not to educate, but to get a signature on the bottom line, at any cost.

Based upon my experience, here are the Top 10 Mistakes Mortgage Borrowers Make:

1. Not knowing which mortgage fees the borrower can -- and cannot -- negotiate.

2. Choosing and trusting the first loan officer the borrower interviews.

3. Using an interest-only or "payment option" adjustable-rate loan primarily to qualify for a more expensive house than you could normally afford.

4. Thinking the interest rate is always the main thing.

5. Not comparing the final fees listed on the closing documents to the up-front estimates to avoid the lender "packing the loan" with added-on fees without the borrower's knowledge.

6. Not knowing if the mortgage has a pre-payment penalty - until it's too late.

7. Thinking that renting is always just throwing money away.

8. The borrower does not know if he or she is paying a back-end yield spread or Service Release Premium.

9. Paying for mortgage life insurance, credit insurance or other expensive lender add-ons to increase the amount of kickbacks the lender can receive from various vendors.

10. Paying hundreds of dollars to have a company set up a biweekly mortgage payment plan, something the borrower can generally do for herself or himself -- for free.

From Kickback: Confessions of a Mortgage Salesman, one of the best-selling books on mortgages on Amazon.com.

Posted by: Ted Janusz | December 16, 2007 10:49 AM