Struggling to Make Your Mortgage Payments? Here’s What to Do

The possibility of losing your home because you can’t make the mortgage payments can be terrifying. Perhaps you are one of many homeowners who took out a mortgage that had a fixed rate for the first two or three years and then changed to an adjustable rate. Maybe
you’re anticipating an adjustment, and want to know what your payments will be and
whether you’ll be able to make them.  Or maybe you’re having trouble making ends meet
because of an unrelated financial crisis.
Regardless of the reason for your anxiety, you need to know how to save your home and
how to recognize and avoid mortgage foreclosure scams.

Predatory Lending Red Flags

Excessive Fees

Look out for excessive and/or unnecessary fees.  Loan fees should be no more than 3% of
the loan amount, (e.g., $3,000 on a loan of $100,000). Fees over 5% of the loan amount are excessive. Ask your broker or lender to show you an itemization of the loan amount with all fees explained.

Excessive Mortgage Broker Compensation (Yield Spread Premiums)

If you are dealing with a mortgage broker, find out how the broker will be paid. Sometimes brokers receive extra compensation from lenders called the “yield spread premium.” This is extra pay the mortgage broker collects from the lender for signing the borrower to a loan with a higher interest rate than the borrower deserves.

Tips for Avoiding a Predatory Mortgage Loan

What is predatory mortgage lending?

A predatory mortgage is a needlessly expensive home loan that provides no financial benefit to the borrower in return for the extra costs.  In many cases, homeowners are deceived about the loan’s true costs and terms or are pressured into signing loans they cannot afford.
Many of these homeowners lose their homes to foreclosure.
If you’re in the market for a home loan, here are some questions you should ask and common predatory lending practices of which you should be aware. Because the information in this Guide is by no means complete, you should always have an attorney review all loan documents before you sign them.  If you cannot afford an attorney, you should bring all of your loan documents to a HUD-certified housing counseling agency for review.  To find a housing counseling agency in your area, see the list of agencies at the back of this Guide.