Predatory Lending

Predatory lending refers to the abusive practices of the loan lenders. These lenders actually deceive the borrowers and earn money. The predatory lending can also be termed as planned violation of rules and regulation that is related to the loan industry. The predatory lenders provide wrong information to the borrowers before signing documents and once the documents are signed, the borrowers are literally trapped. Predatory lending denies the borrowers from their enjoying home equity value and at the same time, the borrowers sometime face foreclosure for the same lending practices.

The problem of predatory lending is not only related to the mortgage loan sector but it is a major concern for the borrowers of several other loans like payday loans, overdraft loans and so on. On the other hand, there are several credit cards and various other types of debt programs where the interest rates are more than average.

Cases of predatory lending occur mainly with the less educated persons because the terms are conditions are not understood properly by these people and the loan lenders get the chance to victimize these people through their cunning practices.

Again, the racial minorities and the elderly people are also the soft targets for the predatory lending practices. These types of incidents can be seen in such cases where the loan amount is secured by any kind of collateral. It may be a real estate property or any other property. Predatory lenders always try to take possession of these properties and make huge amount of illegal profit.

A number of lending practices are under analysis and are believed to be predatory lending practices by the consumers. On the other hand, these practices are defended by the lenders and that is quite obvious. The debates on these practices are still going on. Some of these practices are the following:

Credit Insurance Paid in Single Premium
Securitisation Abuses
High Prices on Short-Term Loans
Risk-Based Pricing

The US government has passed a number of anti-predatory laws to handle the illegal practices of loan lenders. Laws like Federal Truth in Lending Act, Home Ownership and Equity Protection Act are some of those laws that are used to control the predatory lending practices.

More Information Related to Finance Theory
Finance Concepts Debt Interest Rate
Public Finance Mortgage Loan Discount
Long Terms Financing Yield Curve Arbitrage
Finance Services Company Arbitrage Pricing Credit Derivative
Binomial Options Pricing Model Capital Asset Pricing Model Cox Ingersoll Ross Model
Black Model Black Scholes Model Chen Model
Liquidity Risk Commodity Risk Consumer Credit Risk
Systemic Risk Currency Risk Market Risk
Interest Rate Risk Settlement Risk Equity Risk
Gordon Model Monte Carlo Option Model Ho Lee Model
Rendleman Bartter Model Vasicek Model Hull White Model
Rational Choice Theory Modern Portfolio Theory Cumulative Prospect Theory
Efficient Market Hypothesis Arrow Debreu Model International Fisher Effect
Floating Currency Financial Risk Management Hyperbolic Discounting
Personal Budget Floating Exchange Rate Discount Rate

Last Updated on : 1st July 2013

This website is up for sale at $20,000.00. Please contact 9811053538 for further details.