Watch for inappropriate conduct by home equity lenders, including the following:
Bait and Switch: The lender offers one set of loan terms when you apply for the loan, attempts to impose higher charges when you sign to complete the transaction. Such a lender may attempt to distract you from the terms of the contract, to use pressure tactics to get you to sign or prevent you from reading its terms, or may even misrepresent what the contract says.
Equity Stripping: The lender gives you a loan based on the amount of equity in your home, even though you will find it difficult or impossible to make the loan payments given your income. If you are unable to make your payments you may lose your home.
Credit Insurance Packing: The lender adds credit insurance to your loan, perhaps at a substantial cost, even though you may not want or need credit insurance. If you need credit insurance, consider applying for coverage through a source other than the lender.
Loan Flipping: The lender encourages you to repeatedly refinance your loan, perhaps also encouraging you to borrow additional funds each time you refinance. Each time you refinance the loan you pay additional fees and points which profit the lender, but also increase your debt.
Deceptive Loan Servicing: The lender provides inaccurate, incomplete, or misleading account statements and payoff figures. As a result, it is extremely difficult for you to determine how much you have paid or how much you owe, and you may end up paying more than you actually owe.
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