It often works like this: an agent working for a lender, perhaps by his own account, tells a potential applicant for the loan that he or she does not qualify for the mortgage for which they apply. The official added that this not only lender not to approve a mortgage loan, but in all likelihood, or any other lender. The agent then the borrower ensures that everything will be fine, because he knows a lender that the customer can get a loan.

At that time, the client referred to this other lender, with whom he is working. The lender will make loans available to the buyer, but the loan has a high interest rate is extremely high closing costs and a prepayment penalty that will make it very difficult for the buyer to refinance later. The buyer, not knowing better and feeling as if he or she can not do better elsewhere, signing the contract and accept the high price of the loan.

The shadow relationships do not end there. Often, these predatory lenders are interested in not only the loan product, but the property itself. By offering high-cost loans to people who can take credit and / or problems of income, lenders may be banking on the buyer can not meet his monthly mortgage payment. Once a buyer default, the lender can take ownership through exclusion and sell at a profit. The lender gets the property that can sell easily, and the agent receives a commission of the loan and another counterattack once the house is sold. The buyer, unfortunately, is left with damaged credit and no place to live.

Loan direction, because this practice is called, is more common in areas where the buyers are poor or have a credit history that may make it less likely to qualify for a loan with a major lender. People who practice this form of predatory lending are easily able to take advantage of customers who either do not know better or they think they can not find a better deal with another lender.

In the event that a lender denies your loan application and assured him that no one else will lend to you, and then offered to send someone who is suspected. It is much easier to simply check with other lenders that you fall into a trap of predatory lending.