Warning Signs of Predatory Lending Include:
- Hidden Fees - VA home loan lenders are limited in the fees they are allowed to charge, so your fees should be straight forward and clear. When you apply for a VA loan, you should receive a good faith estimate from your VA home loan lender which details all of your VA loan-related fees. Make certain that you understand these fees and get satisfactory clarification from your VA home loan specialist if you do not.
- Pressured Sales - If you feel inordinately pressured into a particular type of mortgage, be wary. Although VA home loan lenders are supposed to act in your best interest, it is ultimately up to you to make the decision and no reputable VA home loan lender will try to pressure you or discourage you from exploring other options.
- Bait and Switch - The bait and switch was a common ploy during the subprime era. This tactic involves a lender offering you a particular set of terms, but then drastically changing them before closing without informing the borrower. Whether it be the interest rate, fees, or any other loan term, this is not acceptable. You should not feel pressured to sign any loan paperwork with which you are not comfortable.
Note: Due to the nature of mortgages, it may become necessary to make adjustments to your loan terms; however, your VA loan specialist should keep you fully informed in these instances.
- Failure To Discuss - Your lender should keep you reasonably informed about the terms and progress of your loan. If you regularly have difficulty reaching your loan officer, if your loan officer provides you with vague answers to your questions, or if you find that your closing paperwork significantly differs from your initial paperwork with no explanation, these are all red flags.
- Product Bundling - In most cases, there is no need to purchase additional products or services in the same transaction as your VA loan. The only services that are necessary to close your loan are those which aid the lender in determining the viability of the loan, such as the appraisal, credit check, and title services. Additional financial products should never be a condition of your VA loan.
- Scare Tactics - Some lenders may try to secure your commitment by making you feel insecure about your circumstances or financial position. If your lender is attempting to influence your decision in this fashion, you have the right to find another lender to answer your questions and process your VA loan.
