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Along with the exceptionally low interest rates of recent years has come an unfortunate companion: bank fraud. The commercial noise of all the competing lenders in the home mortgage loan market often obscures the very real problem of bank fraud. If you've recently taken on a mortgage or are thinking of refinancing your home, it's critical that you are aware of the inherent dangers of borrowing money.
Though bank practices are most prevalent among those with lower incomes, the tactics are extend to all consumers. It's important to educate yourself in order to avoid being taken in inadvertently. Anyone using the right terminology and offering great rates can appear to be a legitimate banking-related business, but beware the many signs of those who are simply looking to defraud you and your family.
Among some of the most common warning signs of bank fraud are the following: excessive fees, severe prepayment penalties, "Yield Spread Premiums," which are kickbacks to brokers, and loan flipping. This is the common practice of repeated refinancings on one home. These transactions garner the broker/lender repeated profits from closing fees and more, but are of no benefit whatsoever to the borrower.