Guide Details

Predatory lending is defined as any of a number of fraudulent, deceptive, manipulative, discriminatory or unfavorable lending practices. Many of these practices tend to be illegal in nature however there are some within the confines of the law which are not in your best interest as a borrower.

Beware of anyone (including friends) that proposes any of the following:

• Sell you properties for much more than they are worth using false appraisals.
• Encourages you to lie about information on your loan application including your income, expenses, or cash available for down payments in order to get a loan.
• Lend you more money than you can really afford and repay.
• Charge you fees for unnecessary or even in some cases, nonexistent products and services.
• Pressure you to accept higher-risk loans such as balloon loans, interest only payments, and steep pre-payment penalties.
• Target you when you are most vulnerable to cash-out refinances.
• Withdraw (Strip) the equity from your homes by constantly suggesting that you refinance when there is no pressing need for the money.
• Try to use sales tactics to sell home improvements and then finance them at high interest rates.