December 12
I believe I was involved bad business practices. The original loan was sold a few time the current Banks are Sovereign and Homecomings. I am currently in foreclosure and am awaiting HEMAP and HERO loan decisions. Here are some of my findings.
1.1 loan 8% for 60,000 (Homecomings Financial) and the other is 11% for $15,000 (Sovereign Bank) both original loans that they had purchased. The 1st loan was a 3 year no refinance prepayment clause. Appraisal has the property listed as $134,000
Abusive and Abnormal Prepayment Penalties
Only about 2% of normal conventional mortgages have a prepayment penalty that might be difficult to meet. Up to 80% of sub prime mortgage have an abusive prepayment penalty. Why? This is one more way the predators can gouge an unsuspecting homeowner. The prepayment penalty is a fee the lender requires the borrower to pay if the borrower should pay off the mortgage loan early. The sub prime borrower usually has less-than-perfect credit when originally taking out the mortgage, and the prepayment penalty is hidden in the fine print.
Over the next few years the borrowers may manage to improve their credit and want to obtain a new mortgage that has lower interest and lower payments. However, the prepayment penalty on the original mortgage (which often equals 5% of the original loan) is so high that it eats up any equity the homeowners have built up and can even leave them owing more money. Homeowners often are trapped into keeping the original, high-interest mortgage.
This is also another case where the lender gives a kickback to the mortgage broker for helping to include the high prepayment penalty in the mortgage.in the future, when the homeowner has to pay the prepayment penalty, the mortgage broker pockets more money.
Because the predators using high prepayment penalties channel the borrowers into sub prime loans, the honest conventional lenders lose a great deal of prime loan business. This indirectly affects the fees they need to charge their regular prime borrowers. Everyone loses when predatory lenders have their way.
2. They hung up the phone and would not negotiate.
3. I was sent to various departments in a runaround from loss mitigation to bankruptcy and back. They declined to provide me with an Act 91 notice so that the state may assist me, after declining to know what an Act 91 was.
4. I never received a return calls to refinance nor did Homecomings provide a return calls to lawyer to negotiate.
5. The bank never showed up to explain the terms of the loan or that there would be 2 loans on the property.
"Predatory lending is defined as intentionally placing consumers in loan products with significantly worse terms and/or higher costs than loans offered to similarly qualified consumers in the region for the primary purpose of enriching the originator and with little or no regard for the costs to the consumer."
Any of a number of fraudulent, deceptive, discriminatory, or unfavorable lending practices. Many of these practices are illegal, while others are legal but not in the best interest of the borrowers.
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