Predatory lending and fraud aimed at Latino customers

The problem of mortgage fraud and predatory lending is a growing one that amounts to several hundred million dollars worth of crime every year. It’s hard to track down and victims are often embarrassed and reluctant to report the crime to the authorities. As time goes on, more and more unscrupulous lenders are tapping into the growing mortgage fraud market, and lately, the primary target is Latinos.

Latinos, studies show, are twice as likely to be victims of predatory lending or mortgage fraud than members of other ethnic groups. The reasons are simple - a language barrier and a lack of understanding of how real estate practices work makes them prime victims for lenders who want to make a few, or a lot of, extra dollars.

Here are a few examples of how lenders and realtors take advantage of Latino customers:

• Realtors have been known to charge Latino customers a fee just to show them a property. This is ridiculous; the fees to realtors are paid by sellers. And yet, a few crooked realtors are pocketing a fee just for showing a house to customers. These fees have been known to run into the hundreds of dollars.
• Lenders have been known to charge as much as ten points for a loan origination fee. This fee is what the lender charges for preparing the loan; it is, in essence, their profit. This fee averages one point on average, so some lenders are charging Latinos ten times as much just to prepare the loan. Ten points is ten percent of the amount of the loan, an amount that goes well beyond unreasonable.

• Lenders have steered Latino customers towards loans with considerably higher interest rates than those offered to other customers, even when the Latino customers qualified for a lower rate.
• Realtors and lenders have conspired to sell property with structural damage or other types of unreported damage, such as termites, electrical or plumbing problems.
• Realtors and lenders have conspired, using fraudulent appraisals, to sell property to Latino customers at prices that exceed market value.
• Lenders have used underhanded tactics such as offering their Latino customers a certain set of loan terms but then offering contracts at closing that have entirely different terms printed on the contract.

Of course, not all lenders are engaging in such practices, but enough of this is going on that Latinos, as a class, are twice as likely to encounter them as members of other groups. One organization is fighting back; CasaNuevaHouston.com has information that can help Latino customers who wish to buy a home. This site outlines what sorts of terms Latinos should expect when shopping for a house and what sorts of things should be regarded as unreasonable. The site attempts to educate and help this vulnerable group that is rapidly becoming one of the larger home buying ethnic groups in America.

These sorts of practices are reprehensible, and anyone who encounters them from either a realtor or a lender should refuse to conduct business with such people. There are enough legitimate lenders who are more than willing to work with anyone that such crooked lenders and realtors can, and should be, ignored.