NAMB discusses mortgage schemes
By MortgageDaily.com staff
12/29/2005

The nation's mortgage brokers have issued advice about how prospective borrowers can avoid predatory lending and other mortgage finance schemes.

With homeownership at a record, some scam artists are out to deplete the equity consumers have built up in their homes over the years, the National Association of Mortgage Brokers said in a recent announcement. Deceptive advertising and misleading practices, including offering unnecessary financial products and services and charging excessive or hidden fees, are several ways in which unscrupulous originators dupe their victims.

Some scam artists may encourage that mortgage prospects lie on the mortgage application by, for example, inflating income or exaggerating work history, while others may encourage the borrowing of more money than is affordable, NAMB said, advising consumers to turn away from such originators.

Borrowers should refuse to sign blank or incomplete documents, the trade group said.

"Beware of door-to-door salesmen, telemarketers, or Internet ads," NAMB added. "These are scam artists' favorite sales techniques."

Plus, consumers should sway from giving in to high-pressure salesmen, as no "reputable broker or lender will try to pressure" to take out a loan, NAMB warned.

Then there are lenders who may encourage the refinancing of a mortgage over and over again in a short period of time -- charging higher fees, points, interest rates, and prepayment penalties each time. Consumers should be cautious of excessive fees and prepayment penalties and watch out for hidden fees, which predatory lenders often charge, NAMB suggested.

Borrowers should also know the terms of the loan before signing their name on the dotted line. Otherwise they run the risk of being enticed into a loan with low monthly payments and be surprised with a balloon payment due at the end of the loan term, the announcement indicated.

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