I Smell A Rat: Detecting Predatory Loan Offers

If you’re planning on taking out a loan in the near future, you need to know how to detect predatory lending practices. Although extensive knowledge of the mortgage and finance industry is the best way to detect bad loan officers, it is not the only way, so don’t despair! There are several easy ways to spot seedy loan officers.

High-Pressure Tactics

When loan officers use high-pressure tactics to get you to agree to financing, you should immediately find another loan officer. It is a common practice for loan officers to prey on individuals whom they believe are vulnerable. The elderly are prime targets for mortgage loan officers since older generations often live in their homes for decades and have built up substantial equity.

One Deal-One Lender

One sign of predatory loan officers is when they tell you that financing is only available through one specific lender. In reality, many lenders offer deals that are readily available. However, if you have a low credit score, you must be extra careful. Some reputable lenders do offer financing to people with low scores, but the terms of the financing cost more than a loan with a good credit score. Loan officers will target people with low scores by offering a once-in-a-lifetime deal, only to inflate the interest rate and tack on unnecessary fees. Talk to multiple loan officers, especially if you have a low credit score.

I Smell A Rat: Detecting Predatory Loan Offers

Final Closing Costs/Terms

If the closing terms you agreed to with loan officer are not the same as the terms when you are ready to close the deal, do not sign the papers. Immediately inform the escrow company there are discrepancies in the final terms. Some people automatically assume the terms at closing are the same as what was agreed to with loan officers. Unfortunately, some loan officers will add on fees or tack on additional costs without the borrower’s knowledge. If you do sign the loan documents, and later learn there were discrepancies, you can use this as a foreclosure defense in the event you default on your mortgage.


Predatory lending practices involve lenders who are willing to approve you for financing that is not in your best interests. However, there are subprime lenders that will extend you financing if you have bad credit. Before you sign, understand that risk-based lenders charge more in interest and closing costs. And if despite your best efforts you get caught up in a predatory loan, foreclosure defense lawyers can help you get retribution.

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