What is Predatory Lending?
Although predatory lending is not defined by federal law; it is a set of abusive lending practices that take advantage of borrowers in order to financially benefit the lender. It encompasses both legal and illegal means to prey on isolated and vulnerable clients. Predatory lending practices drive borrowers into debt and put them at risk for loss of their assets.
Are all Lenders Predatory?
Most mortgage lenders and brokers have their customers' best interests in mind but there are some who may try to take advantage of consumers by using "abusive" or "predatory" lending practices
What are Some Examples of Predatory Lending?
* Charging Unusually High Interest Rates
* Charging excessive rates and fees
* Repeatedly refinancing a loan within a short period that isn’t beneficial to the client and charges high loan fees with each refinance
* Charging excessive rates and fees to a borrower who qualifies for lower rates and/or fees offered by the lender
* Inducing a borrower to pay excessive, questionable and often undisclosed fees and costs
* Inducing a borrower into a sub-prime loan product when they qualify for a prime loan product
* Approving a loan without consideration of the borrower’s true ability to pay and / or based upon fraudulent information
How Does Consolidating My Credit Cards Into A Mortgage Loan Put My Home At Risk?
Consolidation requires a new loan. This may increase your current interest rate or monthly payment. If you didn’t read the small print, understand the added extra costs and fees, or understand what type of loan you were getting, making the payments could become difficult. If you can’t keep up with the payment, they could foreclose on your home.