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Minnesota Predatory Lending Practices: Loan Collection

Predatory Mortgage Lending: Loan Collection

Predatory mortgage lending can take many forms, but the scams almost always end the same: costing you money. Unfairly. And sometimes the result is paying and paying—trying to keep up—and still losing your house.

The thought of losing the house is terrible enough, but predatory collection practices employed by lenders and their agents can magnify the already frustrating and depressing feelings. But you don’t have to be a victim of abuse and fraud. No matter the circumstances, no creditor or lender can justify abusive and fraudulent schemes that have infiltrated lending practices.

Abusive Collection Practices

Predatory mortgage lenders will often demand monthly payments at prices borrowers scarcely maintain or create mortgages such that borrowers default and are forced to refinancing. Lenders employ aggressive collection techniques to maintain their own income levels. Abusive collection practices commonly contain threats of immediate eviction, despite the fact that eviction procedures are time consuming. The goal is to terrorize the homeowner into making payments whether the borrower can afford to or not. Having to choose between housing and food should not happen to anyone.

Flipping

Flipping is common in default and collection. The predatory lender uses the default as an excuse to refinance the current loan into a new loan at the borrower’s expense. Refinancing a defaulted loan into a lower interest rate and lower monthly payment loan might make sense. Refinancing a defaulted loan just to charge extra fees and interest never makes sense.

Foreclosure Abuses

Abuse can take many shapes. Lenders or collection agents might convince borrowers to transfer property deeds without going through foreclosure proceedings by claiming that the cost and the hassle to the borrower are prohibitive and that signing over the deed without a fight is the best alternative. Giving up is not the best alternative. If the borrower concedes before foreclosure, he or she is waiving the right to protections required by statute. Deeding the house to the bank or lender might result in the sale of the home for less than market value or without the chance to cure the default.

Unreasonable Prepayment Penalties

Prepayment penalties are intended as a remedy against lost interest potential. When a borrower and lender agree on a loan, the lender is looking to interest for its profits. When a borrower pays the loan in a shorter time than the loan term, the lender loses out on interest. Reasonable prepayment fees are allowed. But charging prepayment fees when the borrower defaults and the loan is accelerated and fully due is unreasonable.

The lender has already profited from past interest and is now looking for the return of its entire investment, but the lender is also demanding penalties on future interest that it will not receive from the borrower. The predatory nature of this practice is that the lender has its original money plus profits and can reinvest that money. If the lender were to reinvest anew and receive prepayment penalties, then it would be positioned at a better point than it otherwise would have been at the expense of the borrower who gets no further benefit from the lenders loan. Prepayment penalties on accelerated loan repayment constitute predatory mortgage lending.

If you have a collection agent calling you day and night, or if you have been threatened with eviction, contact attorney Patrick K. Oden for a free consultation. Many cases can be taken on contingency, which means that you don’t have to pay attorneys fees unless you win or settle your case. Don’t put up with abuse.

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