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How to Avoid Predatory Lending, Part II

Nearly all predatory lending occurs in the “subprime market,” where loans are sold to people with less than ideal credit histories. Subprime loans have played an important role in helping millions of consumers achieve homeownership, but, unfortunately, some lenders abuse their role and take unfair advantage of vulnerable borrowers. Here are some common problems with predatory loans:

High interest rates and fees: Predatory lenders often charge extremely high interest and fees that are added into the total amount of the loan the borrower must repay. These lenders charge what they can get away with, not a fair amount based on the credit history of the borrower.
Broken promises & bait and switch: Sometimes hosme buyers are offered a new loan or a refinance of an existing loan that seems to meet all of their needs–only to find that interest rates and fees have changed when they get to the closing table. Agreeing to last-minute changes can cost thousands of dollars and result in a loan they just can’t afford.

Continue Reading: How to Avoid Predatory Lending, Part II

Posted by Melissa DelGaudio on 05/05/2007 01:47 PM

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