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PREDATORY LENDING
What is predatory lending in the mortgage industry. What is meant by predatory lending. What are the most common predatory loans. How do I know if a loan is predatory. Which answer is an example of predatory lending. Is predatory lending against the law and not legal? How does a loan officer realize that the loan he or she is originating borders on predatory lending.
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1 Reply
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What does Predatory Lending mean in the Mortgage Industry?
Predatory lending is defined as unethical practices by lenders toward borrowers, such as misleading them with unaffordable loans or unfair terms. These activities are meant to profit the lender at the borrower’s expense.
Common Predatory Loans:
- High-cost Mortgage.
- Balloon payment mortgages.
- Negative amortization loans
How do you recognize predatory lending?
- Are fees or interest rates exorbitant?
- Did they use pressure tactics?
- Were all loan terms disclosed correctly?
Is it illegal to do predatory lending? Yes, many federal and state laws make predatory lending illegal.
How can we identify when someone is engaging in this practice towards us so we don’t become victims ourselves?
Is Predatory Lending Illegal?
Yes, predatory lending is illegal under various federal and state laws.
Recognizing Predatory Lending:
A loan officer should identify predatory lending if the loan terms are excessively costly, unfair, or not properly explained to the borrower, violating laws such as HOEPA.
Understanding and avoiding these practices is essential for ethical lending.