What Is Predatory Lending?
In essence, predatory lending is where the homeowner does not benefit from a mortgage or refinance transaction and the lender does. Predators who often take this deceptive and illegal route have the upper hand and most of the time, they prey on the elderly, low-income families, minorities, and the homeless.
Most victims of predatory lenders often lose their home and have their credit ruined. The most common of all predatory lending is where a greedy predator places an unsuspecting victim in a subprime loan with lots of extra fees. Often, the victims could have qualified for a conventional loan but because predatory lenders seek out the helpless, uneducated, and minorities, they easily gain their trust.
Families facing foreclosure often fall prey to predatory lenders as they tell them they can help them refinance their loan where again, interest rates are higher, fees are charged, and the payments become too high for the homeowner to make causing the homeowner to not only lose their home, but damage their credit and lower their credit score.
Predatory lenders also pounce on the newly widowed. They often entice them into refinancing a mortgage and actually place them in a subprime loan that looks good on paper but actually ends up costing the unsuspecting widow more money each month. When considering advice to the newly widowed, some banks and financial institutions insist it's beneficial for widows to open enormous lines of credit that become too tempting to utilize. If you're a recent widow seek advice before you change your mortgage or open up offered lines of credit.
Image Credit: Office Thief by Michael Molenda / The Commons