Predatory Lending or Not? You Decide

No Closing Costs? Yeah right.....

I met with a potential seller in Lawrenceville for a second time today after she called me for some advice. About two months ago I sat down with her and discussed her options for selling her home. She's an elderly woman in failing health and at the time she was uncertain about what she wanted to do. She received a letter in the mail from Chase a couple weeks ago offering her a no closing cost refi on her mortgage. Being intrigued and not understanding what she was being offered she asked them to send her more information.

The next day she receives a package FED EX from Chase and it contains several documents of which is a good faith and loan application for a new mortgage. The welcome letter congratulates her for being approved for a new 30 year fixed rate mortgage at 4.5% for her $86k balance. You might be asking, "what's so bad about that Steve?"

Here's what's bad about it....she only had 10 years left on the original note and her interest rate was 5.125%. Considering the fact that conventional rates are around 3.5% right now I don't see this as a win for her. In fact, to me it's borderline predatory lending. Why would anyone increase their mortgage by 20 years to save .6% on their rate?

Not Playing Fair

This infuriates me for two reasons...First, I've tried to refinance my own Chase loan for a lower interest rate recently to no avail. They wouldn't help me probably because I'm paying them 6.75%. Secondly, they sent this solicitation to an elderly person that would have been paid off in a little less than 10 years.....someone that had she not called me could have just signed the docs because she was made to believe it was a much better deal.

So they lower the interest rate to make it look attractive, her payment drops around $130 a month, and charge her no closing costs. Which in all actuality costs them very little to begin with. The only real costs are some processing and overnight fees and the fees paid to the attorney that handles the closing. Not cool Chase, not cool.

Consult a Realtor

If you receive one of these type offers in the mail, make sure you understand it before moving forward. It may seem like a good deal but it's probably not going to benefit you that much. Call me and I'd be happy to look it over for you.






www.SteveSellsGwinnett.com Steve Rider, CDPE Realtor with Keller Williams Lanier Partners in Braselton Georgia. Covering Barrow, Jackson, Gwinnett and Hall Counties in Northeast Georgia. If you're looking for real estate in Gwinnett County please contact me at 404 663 7063 or steverider1@gmail.com.