Often, such lenders wish to sell the loan to an investor, which requires that the borrower appear to have sufficient income to repay the loan. Such lenders have the borrowers sign a blank application form, and then insert false information on the form, claiming that the borrower has employment or income that she does not, so it appears that she can make the payments. This is done to create the false impression that the borrower is able to pay off the loan, even though the lender is well aware that the co-signer has no intention of contributing to the payments. Often, the lender requires the homeowner to transfer half ownership of the house to the co-signer. The homeowner thereby loses half the ownership of the home and is saddled with a loan she cannot afford to repay.
Some predatory lenders make loans to homeowners who are clearly mentally incapacitated.
They take advantage of the fact that the homeowner does not understand the nature of the transaction or the papers that she signs. Because of her incapacity, the homeowner does not understand that she has a mortgage loan, does not make the payments, and is subject to foreclosure and subsequent eviction. Some predatory lenders forge loan documents. In such cases, the unwary homeowners are stuck with loans they know nothing about. High Annual Interest Rates.