I currently have a owner financed @ 12% single family home. Isn't that predatory lending. How can I get out ?

Question

Credit won't allow for refinance at lower rate, but working on it. If loan considered predatory, what can I do about it?

Answer 1

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Answer 2

What is your middle credit score. Appraised value of the home. The payoff (amount needed to get out of this loan). Hoe long have you been in the home? Income, job time..these are all factors a Loan Officer would need.

If your middle credit score is 500 or better anything is workable....but not at 100 percent.

If the home got appraised for 150,000 and you owe 150,000 - than it is not workable. But if he wants 120,000 it is workable at 80 percent with a 500 middle credit score. If your score is higher, could get 85,90,95 percent. Just depends on the above factors.

Talk with a broker, a broker underwrites for many company's (I underwrite for 150 companies) so I only have to pull credit 1 time, and they look at my credit. A single lender (not a broker) has programs available, but they may not be able to help you and your situation, so you go elsewhere, and than that person pulls your credit (see what I mean.) If you shop, your credit is pulled and that is considered a soft pull, for a 30 day period. Just like shopping for a auto, it is good for 30 days. If you apply for a credit card, that is considered a "hard" pull and it drags down your credit score. When looking for a home, please do not apply for a credit card, Department Charge Card, Gasoline Card or make any major purchases, like a auto, etc. This will pull your credit down

Try to find someone (broker) that will pull your credit one time, and submit your loan application to company's that will go off his credit report. By the way, a loan application is called a 1003, and they will issue you a GFE (Good Faith estimate, with-in 3 days, that is per the RESPA laws, and the TIL (Truth in Lending). This will tell you the up-front closing cost (etc) associated with your loan. This is a estimate only - not the final - but it does help you figure things out.

Lenders look at the middle score...of the 3 scores. If you only have 1 score or 2 scores (have seen it), it is still workable....but unless a lender sees the whole picture - credit - income - job time, etc - than you will not have a "true" picture of what you can afford - Hope this helps - There are also Government programs out there, but they too are looking for job time, etc.....They are not so much looking a credit - but the other factors are taken into consideration. With a government loan - collections and judgements will have to be paid (most ppl do not know that) but for FHA it is true.

Answer 3

I have been in the mortgage industry for over 10 years. As an underwriter for the top 6 Wall Street Broker, identifying predatory lending was once of my job descriptions.

I must agree 12% is rather high given rates have been at an all time low over the past 10 years fluctuationg a very little bit. However, knowing the risk that lenders and big banks make on a daily basis, an individuals risk is even greater. You indicated in your question that your credit will not allow a lower rate. There are mortgage companies that speacilize in C paper loans, credit scores in the low 500's. If you are unable to get one of those loans, then I'd have to say your credit worthiness is not up to par and literally a representation of your past payment history and possibly your current payment history. If you were to obtain a C paper loan, your interest rate would be close to 12%, starting at 10%.

I'm certain that a loan officer whom you sought out to refinance you, provided you with the wonderful knowledge of predatory lending but obviously was unable to provide the wonderful knowledge of a C paper loan. Be careful of LO's who seem to know it all but literally have no loan solutions. Ask your LO to look into loans with wholesale lenders such as Option One, BNC Mortgage, EMC Mortgage, Aurora Home Loans....there are many more who specalize in low credit scores. Don't look for an 8% interest rate, your loan is going to cost you....in fees and rate. Look for origination upwards of 2% or higher due to the difficulty of such a loan. The lender will also make money on your rate which in most cases will reflect on your settlement statement as yeild spread premium or rebate. Again, this is not predatory.

Thank your lucky stars you have been given the opportunity of home ownership through your landlord/seller. Also, in order to be a predatory lender, you have to be a lending institution.

Answer 4

Depending on which state that you live in, I do not think that this is predeatory lending. Try and work on you credit have no late pays! On your payments you can be 29 days late before the actually report you. Get you credit right or see if you can even go and refinance for 9 percent or so. Have you had bankrupcy in the last 2 years? If your score is above 500 they can usually make something happen for you especially if you have $ down. Speak to a mortgage expert.

Answer 5

12% percent isn't predatory lending. I assume your credit is horrible which is why you have the rate. anything really around the 15% and above is predatory lending. you, unfortunately, are just at the short end of the stick really. only thing you really can do is rebuild your credit as best you can, then refi when yo uare able to. some lenders can bail you out of your situation but with your bad credit then you rate will probably go down a percent or so.

Answer 6

12% predatory? No. You yourself state your credit history won't let you refinance. You must have thought it was a good deal at the time you agreed.

I keep hearing commercials all the time for lenders willing to lend to people with poor credit. Can't you get a better deal with them? If they won't even lend to you, then consider yourself lucky to have a mortgage at all.

Answer 7

You can always refinance with some other lender and pay the current loan off. Might have to pay penalties.

12% is WAY too high unless your credit is really awful. Also, if you have equity built up, you can refinance (without borrowing more out) and have a higher amount of equity figure into how stable your loan is (e.g., if you had 5% down you have to pay more for the loan than if you had 20% down). If your equity percentage has gone up take advantage of that, too.

Answer 8

did someone hold a gun to your head when you agreed to the terms????
did you READ the paperwork that you had to sign when you agreed to the terms????
you agreed, you signed, you pay.......
you answered your own question, if credit won't allow for a lower rate re-fi, then just keep paying, i would pay extra to bring the balance down, and after 6months-year, try to re-fi again. that's all you can do.
was only predatory if you were forced into it.

Answer 9

It may be predatory but you signed. Don't think there is much you can do.

Answer 10

Sorry, not even close...
A friend may be able to help. If he can't help you directly, he can refer you to someone who can.
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