Common Predatory Lending Practices
Predatory loans come in a number of different forms, but all have the potential to trap consumers in debilitating debt. Fortunately, consumers are protected from unfair, misleading, or deceptive lending practices, so if you were recently taken advantage of by an unscrupulous lender, it is important to contact an experienced Philadelphia predatory lending lawyer who can walk you through your legal options.
Examples of Predatory Lending Practices
There are a variety of practices that satisfy the definition of predatory lending, but the most common include:
- Equity stripping, in which a lender repeatedly refinances a loan in order to generate fees for the lender, while also simultaneously stripping the consumer of the equity in his or her home;
- Bait-and-switch schemes, which occur when a lender promises one type of loan or interest rate to a consumer, but without explanation provides that individual with a different loan or rate upon closing;
- Loan flipping, which occurs when a lender refinances a person’s loan with a new long-term high cost loan, at which time the consumer is also required to pay a variety of fees;
- Packing, in which a consumer receives a loan that also contains fees for services that are not requested or required, such as unnecessary insurance products; and
- Balloon loans, in which lenders provide consumers with a small monthly payment that only covers interest, meaning that the principal of the loan isn’t addressed until the final payment, at which point, many consumers face foreclosure.
Although these are amongst the most common practices used by unscrupulous lenders, they are by no means the only ones. In fact, all of the following activities, although they may not have specific names, also qualify as deceptive when utilized by lenders:
- Charging abusive prepayment penalties;
- Using marketing practices that target low income, non-english speaking, or elderly borrowers who don’t have the ability to fulfill the terms of the loan in question;
- Providing false or inflated appraisals in an effort to overstate the value of a property sourcing a loan in order to deceive a consumer;
- Convincing borrowers to falsify information on their applications;
- Convincing consumers to accept high interest subprime loans even though they could qualify for better terms on conventional loans;
- Emphasizing low monthly payments instead of other important loan factors;
- Charging excessive points and fees, including extra closing costs; and
- Making excessive payments to mortgage brokers, who are then tasked with bringing consumers to a certain lender.
A wide range of individuals, including lenders, servicers, brokers, title agents, and appraisers could all be held liable for engaging in these types of deceptive practices.
Contact an Experienced Predatory Lending Attorney for Help with Your Case
Please contact dedicated predatory lending lawyer Louis S. Schwartz at CONSUMERLAWPA.com today to learn more about your own legal options when filing a claim against lenders who violate state and federal regulations. You can also reach a member of our team by calling 215-790-1800 or by sending an email to firstname.lastname@example.org.