Mortgage companies always seem to be in the news lately, and today is no exception. Articles about one large lender’s alleged practices, and how attorneys general from various states are reacting, have been popping up all over in the last three weeks. They demonstrate that reverse redlining is not just the province of sketchy boiler-room sub-prime outfits. But what exactly is reverse redlining?
Redlining is the practice of refusing to lend in down-and-out neighborhoods because it’s perceived as riskier than lending in mansion territory (at least it was until prime buyers of big houses started defaulting in droves). But during the big lending boom of the last few years, that wasn’t the issue. Rather, certain lenders actually sought out these neighborhoods, assuming that the people in them were less educated, more desperate, and therefore more likely to buy sketchy mortgage products. That’s reverse redlining. Municipalities have even gone as far as blaming mortgage lenders for creating blighted areas in their towns.
Memphis, like many cities throughout the US, has been devastated in the economic downturn. Unlike most other locales, however, Memphis is placing the blame for its crime, unemployment, and blight squarely on Wells Fargo Bank. The city is suing the lender, claiming violation of the fair Housing Act caused home buyers in certain neighborhoods to be targeted for risky loans and forcing whole neighborhoods to go down when the foreclosure wave hit.
But Wells counters that Memphis has a long history of economic turmoil, poverty, unemployment, and crime, and that a mortgage lender is not the cause. Perhaps those in government are finding themselves in the hot seat and it’s easier to blame lenders than take responsibility. As the case progresses, more will come to light.
In any event, this blog is about you, the credit-challenged person who needs a mortgage. And if you live in a disadvantaged neighborhood, you may find yourself targeted by dirtbags hoping to make you a bad loan. The best way to protect yourself is to simply refuse to work with or provide any information to anyone who approaches you unsolicited. Make your own inquiries.
This site is a good place to find licensed lenders who offer legitimate products. Understand that these days, if you don’t qualify for an FHA loan, you’re looking at hard money financing. Sub-prime mortgages are rare as hen’s teeth (as grandma might say), but hard money lenders are private individuals or groups who are willing to lend to those who can put up big down payments and pay big fees. Because they aren’t required to be licensed, you have fewer protections when dealing with these folks.
Once you take your best shot by completing the inquiry form on this site, you will either end up with a few bad credit mortgage offers to select from, or you’ll be told why you don’t qualify for a mortgage today. Being turned down is okay! You don’t have to put a bag over your head or anything. Because with your declination, you get valuable information; you can work with your loan agent to determine what to do to get an approval and put yourself on a plan. There are debt managers and credit counselors who get big bucks for that advice. Play your cards right, stick with reputable lenders, and avoid reverse-redlining scoundrels.
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