Some predatory lending practices you should know:
  • Offering loans to borrowers knowing their financial situation cannot permit the loan repayment.
  • Targeting low-income prospects with poor credit and seniors with large amounts of equity in their homes.
  • Making unsolicited telephone and mail offers or sending checks that become a loan if cashed.
  • Binding pre-payment penalties to mortgage loans as a requirement instead of an option.
  • Encouraging payments of interest only on the loan thus making the loan chronic.
  • Not reporting subprime borrowers’ good payment record to the credit bureaus. This is necessary to improve credit scores and to become eligible for lower-cost loans.
  • Packing a loan with single premium credit insurance products, such as credit life insurance.
  • Making recurrent refinances of a loan and charging high points and fees on each refinance.
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