Loan Servicing Fraud

A growing problem for consumers is the lack of completed documentation and terms that some lenders provide their customers. Recently, a homebuyer complained about receiving a mortgage statement with a higher monthly payment amount after the loan was processed. What happened? This first-time buyer was the victim of a familiar lending scheme: Additional costs, such as legal fees, were added at settlement without proper  .

Lender bait-and-switch is also an all-too-familiar scheme: Buyers are offered a rate when they apply for the loan but are pressured to accept higher rates and charges to close the transaction. The consumer, who fears losing the loan, agrees to the new terms.

Protect Yourself Against Lending Fraud

If you are shopping for a mortgage, referrals from friends and family are one of the best ways to find a reputable lender. If you are unfamiliar with the lender - e.g., it is not the neighborhood bank -- do a search on the Better Business Bureau Web site for additional information and any history of consumer complaints. Reputable lenders should provide you with the following documents:

• Good Faith Estimate
• Truth-in-Lending
• HUD-1 Settlement Statement

These documents will clearly state the loan amount and any additional fees that you may incur such as title insurance, escrow, homeowner's insurance, and mortgage insurance.

Don't let yourself be pressured. Never sign on the dotted line before all of the documents have been reviewed - particularly if you suspect that loan terms have changed. If your loan officer is present at settlement, do not sign anything until all your questions are answered and you feel comfortable. If there have been changes in the loan terms prior to settlement, they should be disclosed to you prior to and not at settlement. If you still dont feel comfortable, walk away, you can always close tomorrow..You And make sure the lender included comparable sales for your home; this ensures that your home was appraised for what it is really worth. Never leave a signature line or space on an application blank and make sure at closing the lender did not change any of the information you provided.

Consumers who are a bad credit risk are the likely victims of these schemes. First-tier, reputable lenders require credit history, employment history -- basically all of your information -- before making an informed lending decision.