Mortgage Fraud and Predatory Lending

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Mortgage Fraud and Predatory Lending
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HUD Brochure

• http//www.hud.gov/offices/hsg/sfh/buying/loanfrau
  dbroc.pdf

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Predatory Lending

• Deception, fraud
• Manipulating borrowers through aggressive sales
  tactics
• Taking unfair advantage of borrowers
• Loan terms that are abusive
• Occurs primarily in the subprime lending market

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Predatory Lending--Practices

• Loan flipping
• Asset flipping
• Excessive fees or packing
• Lending without regard for ability to repay
• Loan terms that are abusive
• Collusion among players in the market

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Predatory Lending--Examples

• Misrepresenting loan terms
• Encouraging borrowers to misrepresent income,
  etc.
• Providing borrowers equity from the seller

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Predatory Lending

• Best defenses
• education of borrowers
• making sure all transactions are arms length
• creating a competitive climate in your program
• education/ awareness of program managers