Mortgage Broker Reveals Predatory Practices
As thousands of Americans are defaulting on their home mortgages, ABC News asked the question of how these bad loans were made in the first place. In its video report, ABC interviewed a mortgage broker who revealed part of the answer. The broker himself was a 20-year old college student when he began this work in 2005. He was hoping to make money quickly and after two weeks of training was going to Americans’ homes to sell mortgages. He notes three dishonest practices that the brokers and lenders engaged in to make money from these families: (1) he would sell adjustable-rate plans by assuring families that they could refinance before the rate changed, despite lacking any assurance that they would actually be able to; (2) lenders encouraged him to lie about the borrowers income so that they would qualify for certain loans; (3) lenders encouraged him not to sell the mortgage with the lowest interest rate so that the lenders could earn more money – at the expense of these families.
The interviewed broker, who “felt guilty” about his work, is now volunteering at the Center for Responsible Lending to help families that have been hurt by the credit industry. But what will the lenders do in order to help these families? At the very least, they ought to curb these predatory practices before future families also become their victims.
At the very least, they ought to curb these predatory practices before future families also become their victims.
Curb? How about stop? And are the practices just "predatory," or are they criminal?
After all, it's pretty difficult to complete a mortgage transaction without communicating with someone outside of one's office ---
Wire fraud! Mail fraud! Bank fraud! Where are the prosecutors?
September 16, 2007 2:38 AM | Reply | Permalink
"But what will the lenders do in order to help these families? At the very least, they ought to curb these predatory practices before future families also become their victims."
I know it's fun to blame corporations but enough with the victim mentality. Borrowers also gave incorrect information on their signed applications. And shame on the customer if they didn't shop around for the lowest rate.
On a side note, what's the big deal? Renters with bad credit purchased homes that they can't afford and are now becoming renters again. If anyone needs saving its the lenders. Deadbeats that agreed to pay their bills are leaving them with homes worth less than the value of the mortgage.
September 18, 2007 8:56 AM | Reply | Permalink
For those who presume to advise (tell?) prospective mortgagors that they should just "shop around for the lowest rate," I suggest going over to Calculated Risk and spending some time with Tanta.
Warning: It'll cost you a lot of time; your eyes may glaze over; but if you complete the project, you'll no longer be so quick to blame(?) the victims.
September 18, 2007 9:40 AM | Reply | Permalink