The unethical and marauding practice in which lending organizations use deceptive or fraudulent techniques in order to prey upon people in need of financial loans is referred to as predatory lending. This, according to an audit report carried out by the Federal Deposit Insurance Corporation, consists of a lending organization “imposing unfair and abusive loan terms on borrowers.”
It is worth noting that although there are laws against a few of the specific practices that are commonly included in the collective term “predatory lending,” the phrase itself is used by many federal agencies to refer to many different illegal activities carried out within the loan industry.
Victims of predatory lending are often convinced or manipulated into agreeing to abusive or unfair terms when pursuing a loan. Additionally, predatory lenders will often violate the terms in systematic ways that make it hard for the borrowers to defend themselves against them. When the interest rates implemented are unreasonably high, payday loans, subprime credit cards, and some cases of overdraft loans and consumer deft also tend to fall under the predatory lending umbrella.
According to the Federal Trade Commission, there are victims of predatory lending across all demographics. However, more common targets of predatory lenders are poor or less educated people, seniors, and racial minorities. These victims are trapped in a deal in which they have to back their loan with collateral of some sort, which can lead them to lose their house, vehicle, or other kinds of property.
Practices and techniques that are often used by predatory lending entities include:
- Single premium credit insurance
- Failure to clearly or accurately disclose the terms and conditions
- Securitization and servicing agent abuses
- Failure to introduce the loan price as negotiable
- Unjustified risk-based prices
- Short term loans with unreasonably high fees
If you have unfortunately found yourself a victim of predatory lending practices, we at Jance Weberman have plenty of experience dealing with such cases. We take pride in our track record of defending people who have been unfairly subjected to unfair and abusive loans, and we will gladly take on your case. If you are in need of legal counsel for a predatory lending case, be sure to call us at (213) 386-9100.