Predatory Lending

Predatory lending describes unfair, deceptive, or fraudulent practices of some lenders during the loan origination process. While there are no legal definitions in the United States for predatory lending, an audit report on predatory lending from the office of inspector general of the FDIC broadly defines predatory lending as "imposing unfair and abusive loan terms on borrowers." Though there are laws against many of the specific practices commonly identified as predatory, various federal agencies use the term as a catch-all term for many specific illegal activities in the loan industry. Predatory lending should not be confused with predatory mortgage servicing which is used to describe the unfair, deceptive, or fraudulent practices of lenders and servicing agents during the loan or mortgage servicing process, post loan origination.

One less contentious definition of the term is "the practice of a lender deceptively convincing borrowers to agree to unfair and abusive loan terms, or systematically violating those terms in ways that make it difficult for the borrower to defend against." Other types of lending sometimes also referred to as predatory include payday loans, credit cards or other forms of consumer debt, and overdraft loans, when the interest rates are considered unreasonably high. Although predatory lenders are most likely to target the less educated, the poor, racial minorities, and the elderly, victims of predatory lending are represented across all demographics.

Predatory lending typically occurs on loans backed by some kind of collateral, such as a car or house, so that if the borrower defaults on the loan, the lender can repossess or foreclose and profit by selling the repossessed or foreclosed property. Lenders may be accused of tricking a borrower into believing that an interest rate is lower than it actually is, or that the borrower's ability to pay is greater than it actually is. The lender, or others as agents of the lender, may well profit from repossession or foreclosure upon the collateral.

Read more about Predatory LendingAbusive or Unfair Lending Practices, Disputes Over Predatory Lending, Underlying Issues, Predatory Borrowing, United States Legislation Combating Predatory Lending

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... financial crisis outside it, undermines the case that Fannie Mae, Freddie Mac, CRA, or predatory lending were primary causes of the crisis, since ... Some analysts feels that predatory lending was a more important factor leading to the crisis ... was accused of blocking ongoing state investigations into predatory lending practices as the bubble continued to grow ...
United States Legislation Combating Predatory Lending
... at both the Federal and state government level are aimed at preventing predatory lending ... Although not specifically anti-predatory in nature, the Federal Truth in Lending Act requires certain disclosures of APR and loan terms ... Also, in 1994 section 32 of the Truth in Lending Act, entitled the Home Ownership and Equity Protection Act of 1994, was created ...
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... Deposit Insurance Corporation (FDIC) "cited inherent risks associated with payday lending activities and asked the bank to consider ending this line of business," according to ...
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... council member Mike Subin, Perez pushed legislation for protections against predatory lending, among other abusive lending practices ... loan brokers and third party lenders engaging in predatory lending, expanding the compensation cap for those who are victims of predatory lending cases, and ...
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