Utah Borrower’s Predatory Loan Journey

Predatory loans often look attractive at the start, but harm borrowers over time. MLOs must be able to recognize red flags before it’s too late. Choose what happens at each stage of a predatory loan, and learn the consequences of each choice.

Step 1: Borrower is offered a loan with a teaser rate.

Review carefully and ask questions

Accept without reviewing disclosures

Step 2: Borrower is encouraged torefinance after 1 year.

Reviewing the contract details reveals hidden balloon clause!

Accepting a teaser rate without reviewing disclosures leads to skyrocketing rates!

Decline and ask for a fixed-rate option

Accept refinancing

Step 3: Loan includes packed insurance+ junk fees.

Choosing to decline refinancing avoids a flipping trap

Refinancing here will cause equity to shrink!

Push back

Sign quickly

Signing a loan packed with insurance and junk fees adds unnecessary cost

Pushing back saves the borrower money, and avoids predatory schemes