Credit and Bankruptcy Law
What is predatory lending?
Predatory lending refers to lending that preys on those most vulnerable by providing credit but with steep costs. Predatory lending is marked by larger penalties for late payments, penalties for pre-payment, a repayment plan under which periodic payments cause the loan balance to rise instead of drop, and clauses that allow lenders to accelerate the amount of debt.
The Center for Responsible Lending (http://www.responsiblelending.org) has identified what it calls “eight signs” of predatory lending. They are:
Inflated interest rates from brokers
Steering and targeting
Adjustable interest rates that explode
Promises to fix problems with future refinancing
Not counting taxes and insurance
Repeated refinances that drain your resources.