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Digital News Report – We all depend on banks to finance homes, cars and in some cases smaller items. But what happens if you can’t trust your bank. Financial expert, Randy Johnson, says that you need to cautious.
“When it comes to financial products, there have likely been more dishonest individuals per square foot than any industry I can think of,” said Johnson in a recent blog on Credit.com. He said the industry is full of “fly-by-night mortgage brokers and subprime lenders who taught classes in how to deceive customers”.
The problem isn’t just with the small lenders or mortgage brokers. Borrowers need to beware of all lenders. Loan officers may be able to exploit the “customer’s misunderstanding of the proper rate and on the other hand they are violating the relationship of trust the customer counted on”.
But there is good news. One big bank has eliminated “overages”. This occurs when a loan agent “smooth talks” a borrower into a higher rate. The bank makes more and the loan is also easier to sell.
Typically the borrower would pay an extra $2,000 on a $400,000 loan. The loan agent will get an additional $1,000 for his smooth-talking.
It doesn’t take that much of a change in interest rates. Johnson says borrowers could lose if they are charged 4.875 rather than 4.75 percent. That is about a tenth of a percent.
The bottom line is that you need to look-out for yourself because no one else will.
By: Tina Brown