What exactly is Predatory Lending?
Lending and home loan origination methods become “predatory” once the debtor is led in to a deal that isn’t what they expected.
Predatory financing practices may include loan providers, home loans, real estate agents, lawyers, and do it yourself contractors. Their schemes usually target those that have little incomes but substantial equities in their houses.
Services and products themselves are perhaps not predatory. As an example, that loan having an interest that is variable could be an extremely good economic device for a lot of borrowers.
But, if the borrower is sold that loan by having an adjustable rate of interest disguised as home financing loan with a hard and fast rate of interest, the debtor may be the victim of the bait and switch or lending practice that is predatory. Simply speaking, this sort of conduct is nothing significantly more than mortgage fraudulence practiced against consumers.
Typical Predatory Lending Techniques
- Equity StrippingThe loan provider makes a loan in relation to the equity in your house, whether or perhaps not the payments can be made by you. You could lose your home through foreclosure if you cannot make payments. (more…)