A number of times throughout your adult life, you are going to come in contact with a lending institution or work closely with a banker.  The purchase of a new car, a new home or even refinancing an existing mortgage are all situations in which you might deal with them.  While many of those bankers do take care of their customers and look out for their welfare, a few unscrupulous bankers exist who are sharks in disguise.  They are out for the almighty dollar and guess what? You are the source of that almighty dollar and therefore, fair game to unethical business practices.

These bank sharks are predatory lenders and target those people who are too trusting and naïve or have little experience with financial dealings. These could be people buying a home for the first time, senior citizens, college students and people with poor credit who are thankful for even getting a loan.  If your banker has not taken you advantage of financially then count yourself lucky. However, you should still be wary during any financial transactions.  There are warning signs that can indicate to you whether your banker is really a shark in disguise.  You just have to know how to spot them.  Here are a few indicators that should make you think twice about your banker:

1.  A predatory banker will try to get you to sign on a loan based on your home’s equity rather than your take home pay.  This shows that they are not really thinking about your ability to pay.  Rather, they are looking at any hidden kickbacks they might receive when they get you to sign a loan that you cannot really afford.

2.  When a loan that requires a balloon payment is pushed on you, run the other way.  Legitimate bankers want you to succeed financially and maintain good credit.  If you sign on a loan with a balloon payment that you later cannot pay, you stand to lose your home or whatever collateral you used to obtain the loan.

3.  Credit insurance is a big indicator that all is not what it may seem with your banker.  If they are insistent on you including credit insurance in financing your loan, step away from the table.  This insurance could include unemployment, life and disability insurance which can add thousands of dollars in extra fees to your loan.  Many people have these types of insurance already, either through an insurance agent or through their employer.

4.  If you have questions about the loan and paperwork and your banker does not provide adequate answers, it’s time to find someone else.  Many times, you will have to trust your gut feelings on this one.  If something does not sound quite right, it probably isn’t.  Your banker should be forthright and explain the loan in terms that you can understand.  They should answer your questions instead of talking around them.

5.  Keep an eye out for the old bait and switch routine.  A predatory banker will offer one low interest rate to entice you to sign for a loan, but then switch to a higher interest rate at the last minute.  They are hoping that you would be too overwhelmed to protest or even notice the discrepancy. 

6.  If your banker asks you to sign a blank form saying that they will fill it in later when it’s more convenient, don’t do it!  They could fill anything out that they wanted on that paperwork and it would have your legitimate signature!  There would be nothing you could do about it later when you find out your loan is not what it seems.

The six tips above are just a few warning signs that your banker may be a shark in disguise.  To avoid any potential problems in the future, take a finance class for homeowners.  You can usually find a continuing education course at a local community college or church.  Being forewarned is forearmed! This is one way to protect your own interests.  Stonewall pressure tactics.  If your banker is trying to force you into something you are unsure of, get a second opinion.  Shop around different lending institutions before settling on one.  Only you can protect your own interests.  Trust yourself when a situation does not feel right.

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