subject: A Loan Modification Can Work in the Case of Predatory Lending [print this page] Many loan modifications are created due to errors or faults that a lender has created. One of the most common types of errors that a lender may be responsible for is that of a predatory lending error. Predatory lending occurs where a lender throws a person into a mortgage loan that has unfair terms attached to it. A loan modification will work to ensure that something that relates to predatory lending can be eliminated.
There are many things that relate to predatory lending that can get a person to enter a successful loan modification. Excessive fees can be used, for example. These are fees that can add to more than five percent of the value of one's loan. These are fees that can cause a loan to become unaffordable.
A Loan Modification can be used to remove these fees from a loan so the total amount of money that would be owed can be reduced. Reimbursement for past fees can work as well.
Another example comes from prepayment penalties. These are used by lenders who want to make sure that they get the most interest payments out of their clients. They use these to try and keep people from paying off loans early so they can save money. A good loan modification can be used to eliminate these penalties. This is a necessity because there is no reason as to why a person should have to be penalized for paying off a mortgage loan before a payment is due.
Yield spread premiums can also be eliminated in a loan modification. These premiums relate to what a lender will pay to a broker in order to get a person into a high interest loan. This is done to get the lender to earn more money. These premiums can be removed if they are found in a modification process. It is best to work with a forensic loan audit to see if this is present in a loan. This audit can work to compare the loan to general laws in the loan industry.
Mandatory arbitration is something that does not necessarily relate to what one pays in a loan. However, finding a case like this can be means for getting a successful loan modification to work. Mandatory arbitration relates to a part of a mortgage loan where a borrower cannot go to court if any mortgage loan terms are too harsh. A proper forensic loan audit or investigation can be used to see if this is present in one's loan. This can be used to get rid of a major roadblock that would otherwise keep someone from going ahead with a modification.
These are all signs of predatory lending. These are all things that will make it difficult for anyone to work with a good mortgage loan. A loan modification can be used in the event that any of these signs are ever found. A modification will remove anything that relates to predatory lending from one's loan, thus making it easier to pay off.
A Loan Modification Can Work in the Case of Predatory Lending
By: 1stforeclosureprevention
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