1. Beware of predatory mortgage brokers' fees. Often loans are arranged by mortgage brokers who are paid a fee out of a loan, generally a percentage of the loan amount. Therefore, a mortgage broker with a predatory intent has an incentive to increase the amount of your new loan. Sometimes, the mortgage broker may get an additional cash payment from the lender as a reward for getting you to pay a higher rate than you had to. Predatory mortgage brokers often advertise vague promises about helping to solve your financial problems. They rarely explain how they make their money. You should ask the mortgage broker to clearly explain what he or she gets for helping you.
  2. Beware of promises of lower interest and lower payments. Refinancing a mortgage to lower an interest rate can be a good thing to do, but if the new transaction has big fees loaded into the loan, you may end up paying more. Similarly, promises about lower monthly payments can also be half-truths; for example, the old payment may have included taxes and insurance and the new one does not; or the new, lower payment is scheduled to increase in the future through an adjustable rate or balloon structure.
  3. Don't borrow more than you need. Predatory mortgage brokers and lenders may try to persuade borrowers to consolidate bills unnecessarily to make the loan as big as possible. A mortgage puts your home at risk and this risk should never be made bigger than necessary.
  4. Get advice before signing loan papers. This is always the best protection. No matter how desperate you are, and no matter how good the deal sounds, never put a mortgage on your house without first talking to a housing counselor or a lawyer. Free counseling is available to low-income residents through publicly funded housing counseling agencies.
  5. Talk about money matters with family and friends. Senior citizens who are somewhat isolated are very vulnerable to predators.

To report predatory lending practices, please call 1-800-448-4904.

OREC 4-1-02

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