Predatory lending is a set of unfair, unethical and often illegal lending practices designed specifically to deceive unsuspecting homeowners. Predatory lending often includes:
• Providing unaffordable loans based on a borrower’s assets rather than on his or her ability to pay
• Steering borrowers to higher cost loans or loans that will require the borrower to re-finance
• Allowing a borrower to repeatedly refinance in order to charge high fees or points
• Including yield-spread premiums which provide little or no benefit to the borrower
• Engaging in fraud or deception to hide some of the cost features of a loan
• Withholding information about loan options that are less costly or more affordable
Predatory loans often contain higher interest rates and fees far beyond those set by fair lending institutions which can ultimately lead to the loss of one’s home.
To help you combat predatory lenders, the National Fair Housing Alliance (NFHA) and the Ad Council have developed an initiative to arm you with the right information and the right questions to ask your mortgage lender while you are going through the process of refinancing or purchasing a home.
These materials can also help you if you need to get out of an unaffordable loan and are considering a foreclosure rescue option.
We want to help you navigate the loan process so that you can protect yourself from the abusive practices of predatory lenders. The best way to protect yourself and your house is by asking the right questions.