What is predatory lending?
"Predatory lending is defined as intentionally placing borrowers in loan products with worse terms and/or higher costs than loans offered to similarly qualified borrowers for the primary purpose of enriching the lender/broker/banker and with little or no regard for the costs to the consumer. Predatory mortgage lenders don't give terms promised, causing some homeowners to even lose their homes."
Predatory lenders promise loans that are "too good to be true" and pressure borrowers to take them on the spot. Here are a few things you should know about spotting and avoid predatory loans:
How to Spot a Predatory Loan
Balloon payments.
High interest rates.
Monthly payments you can't afford.
Penalties for early pay-off of the loan.
Unauthorized refinancing of your loan.
How to Avoid a Predatory Loan
Always shop around for the right program for you.
Do not be afraid to ask as many questions as you want.
If you don't understand the loan terms, talk to someone you trust to look at the documents for you.
Don't trust ads promising "No Credit? No Problem!" or “We have the lowest rates” If it’s too good to be true, then it may not be true.
Don’t believe “No closing cost loan” ads. There is no such thing as a free lunch.
Ignore high-pressure sales tactics. Do not sign documents in a rush. Take your time.
Don't take the first loan you are offered unless you truly trust the company.
Remember that a low monthly payment isn't always a 'deal.' Look at the overall cost of the loan.
Be wary of promises to refinance the loan to a better rate in the future.
Never sign a blank document or anything the lender promised to fill in later.
Don't sign any document you do not understand.
Make sure you understand the terms of your loans
