Predatory Lending

Not all lenders are honest or willing to explain their loans to the recipients in full. Some may utilize deceptive, unfair, or fraudulent practices during the loan origination process. When these practices are used during a loan, the entire transaction is known as an instance of “predatory lending.”

There is no technical legal definition of what exactly amounts to predatory lending in the United States but an audit report conducted by the FDIC has issued a broad definition as being “imposing unfair and abusive loan terms on borrowers.” There are a number of laws against many of the practices that amount to predatory lending but the term “predatory lending” is used by the various regulatory agencies as a catch-all for illegal activities in the loan industry.

A less broad definition of predatory lending is the “practice of a lender deceptively convincing borrowers to agree to unfair and abusive loan terms, or systematically violating those terms in ways that make it difficult for the borrower to defend against.” This can apply to exceedingly complicated repayment terms or any other aspect of a loan. Credit cards, payday loans, and a wide variety of consumer debts have all been seen as predatory lending. Overdraft loans or protection, particularly when the interest rate is exceptionally high, also fits the bill of predatory lending.

Predatory lending is despicable in all of its instances but it is most despicable in that it generally preys upon the less or un-educated, the elderly, racial minorities, and those that may not speak the native language. Overall, it is seen across all demographics.

Contact Us

For more information on borrowing or refinancing from a non-predatory lender, contact Texas Mortgage Loans here.