We all know the drill.
There are just too many shysters and hucksters out there who get their jollies off on preying on anybody and every body, whatever their reasons may be, and usually it's because the poor borrower doesn't have enough good credit or enough income to qualify for a normal mortgage loan.
Let's refer to this shyster as the "BAD DEBT LENDER" who says that he'll make the loan with 'no money down', and will refinance the poor borrower's house and finance the cost of a loan into the mortgage amount.
Can you believe that the cost of the loan could actually be equivalent to a huge number of points added to the loan in order to close on a desperate borrower.
How about 10 or 15 points added to the cost of the total loan amount ? Good grief !!!
It happens.
What about interest rates 18% and higher?
They happen, too !!!
Usually the loans done by these shysters are smaller loans somewhere in the 5 thousand to 20 thousand dollar price range.
And on top of these shenanigans the crooked lender can get some unsophisticated borrower, who can't do the math, suckered into paying some "nonrefundable application fee" knowing full well that the borrower won't be approved for a loan.
The poor suckered borrower loses some money that they can't afford to lose and the lender has swindled them.
What's really sad is that the lender knows that the borrower can't afford any additional debt, or any mortgage for that matter, and the crooked lender has taken advantage of their terrible misfortune.
The scumbag lender knows full well that the borrower will ultimately default on the loan.
The crooked lender also realizes that they've found easy money because they can foreclose on the property when the borrower defaults.
Because the loan amount is usally a low amount, the crook can then resell the property at a profit.
We sometimes refer to this crime as 'loan sharking', and it's the most unethical, monstrous and heinous kind of lending.
Most loan companies try to stay with the program and adhere to the laws, and remain ethical.
When they deal with higher risk borrowers, the rates for those borrowers are usually higher.
Remember : Ethical lenders will not consciously overcharge their borrowers.
What are your experiences with bad lenders?
Thank you for informative post. I'm interested on this problem too. I'd recommend you to look through this information about mortgage calculators.
Thanks, Jane. Try my mortgage calculator page. You'll never need another calculator and you don't have to download anything.