If I have bad credit, how can I avoid being caught by the police?

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Best Loans for Bad Credit: Top 5 Legit Personal Loans for People With Poor  Credit

For many, the subprime mortgage came to the rescue, successfully enabling millions of Americans to rebuild their credit scores and get home mortgages they otherwise would never have been able to get.

But while thriving, many subprime borrowers were vulnerable to unscrupulous subprime lenders, such as those accustomed to charging high interest rates and fees, which made borrowers' interests increasingly vulnerable. Often, these borrowers may even be able to gain some benefit from the borrower's foreclosure.

As you prepare to step into the subprime mortgage market, keep in mind -- be sure to identify a few of the most common "predatory" lending practices on the market:

The first is steering. What is steering? Steering is when bad lenders purposefully "steer" borrowers into their bad mortgages. In most cases, these mortgages were for amounts that were already beyond the borrower's financial means, and they subjected borrowers to risky terms, including interest-only or balloon payments. Predatory lenders chose to lead borrowers into the subprime fiasco even when they had high hopes of getting mainstream loans with better terms. So we suggest that you make sure to learn more about the rules that different lenders have for you, carefully compare your options, and finally choose the best loan for you.

The second is exorbitant fees and points. The fees and points associated with the loan are not directly reflected in the relevant interest rate, so lenders often mask the fees and points. Normally, the fees and points that a lender should have charged for a mortgage could not have been more than 5% of the loan.

8 Mistakes to Avoid When Trying to Improve Bad Credit - Debt.com

The third is that lenders will choose to abuse the prepayment penalty. It's certainly a great thing for borrowers to see their credit scores increase. But for high-interest subprime loans, that was never a good thing. They will push their borrowers hard to refinance their loans. Normally, subprime loans are subject to early repayment penalties. As for the prepayment penalty itself, it is certainly not necessarily predatory. However, if the loan and interest are paid more than three years after the date of the loan and more than six months after the date of the loan, the practice is considered abuse. In cases where the loan has a prepayment penalty, both lenders are required to specify the details in the loan settlement document.

The fourth is unnecessary products. Predatory lenders also do their best to sell unnecessary or nonexistent products to subprime borrowers and then charge them fees.

The fifth is equity stripping. Those nasty predatory lenders will do their best to incite subprime borrowers to keep refinancing their loans, but it is unlikely to do any good. The cost and fees of the loan are increasing within the mortgage amount, so each refinancing helps the lender "share" the equity in the home from the borrower. Doing so leaves borrowers vulnerable to financial emergencies and potential foreclosure.

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WriterGalli