The questions below are a very good way for you to know if someone could be misleading you about a home loan and its costs to you. Just because you answer "yes" to these questions does not mean you are or have been a victim of predatory lending. But, if you answer "yes" to some of the questions, we recommend you contact the appropriate state agency, by clicking on the Report Abusive Lending link above, for more information and guidance. Those 12 tips may very well help you save THOUSANDS OF DOLLARS and A LOT OF HEADACHES.

1. Were you encouraged to include false information on your loan application?

2. Were you asked to leave signature lines or any other important line item of any form blank? Did the lender or broker alter any information you entered on your loan application?

3. Check your loan file. Are any of the following disclosures missing? (Lenders/brokers are required by law to give you the following items)

1. Good Faith Estimate
    
2. Special Information Booklet
    
3. Truth in Lending
    
4. HUD-1 Settlement Statement

4. Have you refinanced your loan several times, (loan flipping) and each time increased either your monthly payment and/or the total amount you owe on your home? You decide to refinance your home to get extra cash. After you have made a few payments, the lender calls to offer a bigger loan to pay for, say, a vacation. You agree, without knowing that each time you refinance the original loan you must pay high points, fees and a higher interest rate. And if your loan had a prepayment penalty, you'll have to pay that also.

5. Do your documents reveal that your interest rate calculation will change to require you to pay "daily interest" in instances when your payments are late?

6. Is your loan amount on the loan you obtained higher than the value of the home?

7. Did you incur any unexpected costs at settlement that were not explained to you prior to the settlement?

8. After settlement, were you surprised to find that the monthly payments on your mortgage loan were higher than you anticipated based on the initial disclosures?

9. If you have a balloon loan (one in which after a series of low payments the entire loan balance is due in a large lump sum in just a few years), will you need to obtain another loan to finance that final lump-sum amount?

10. Were you required to buy credit insurance, insurance that will repay the debt if you die or become disabled? Just as you are ready to sign the loan paperwork, lender surprise you with additional fees. He counts on you failing to understand that credit insurance is different from private mortgage insurance (PMI). If you object, he may tell you that the insurance comes with the loan (making it seem free) or try to scare you by suggesting that refusing to sign will delay and even jeopardize the loan.

11. Have you been asked to deed your property? If you are behind on your mortgage, a "lender" may offer to help find new financing. But first you are asked to deed your property over to him as a temporary measure to prevent foreclosure. But the promised loan never comes, and you no longer own your home.

12. Borrowers should watch out for brokers or lenders that steer customers to particular companies for various closing services. Most brokers own or have relationships with title companies, escrow agents or appraisers. (Most predatory lenders can't work alone; they need someone else, usually an appraiser or title company, to conspire with them.) Under federal law, lenders are prohibited from requiring customers to use a particular title company, insurance company or escrow/closing agent, for example. They are allowed to require their own appraisal or credit reporting company. If they force you to use companies for any other services, then you may have to be careful.