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Pages:
1 page/≈275 words
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Level:
Turabian
Subject:
Business & Marketing
Type:
Essay
Language:
English (U.S.)
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Topic:

Predatory lending (Essay Sample)

Instructions:

discuss what predatory lending is.this sample discusses what is predatory lending and some of the disadvantages that are involved in this lending

source..
Content:
Predatory lending
Predatory lending is the practice of imposing unfair or unclear terms on borrowing. The borrowers who suffer most from predatory home loans are those with low credit scores. Predatory lending is associates with practice in the sub-prime market which specifically targets unsophisticated and vulnerable borrowers. Most actions of these companies are not illegal, but the results are always the similar: the homeowners may lose their homes and the professionals who are the predatory lenders end up profiting.[Deflem, Mathieu. Economic Crisis and Crime. Bingley, U.K: Emerald, 2011.]
One practice that is common with these loans is charging of the borrowers a large high fee for extending the loan. This result from some of the borrowers made believe that the lender they have currently working with is the only lender who offers mortgage financing. Thus, they do not negotiate charging of high fee. This accompanies high interest charges. The predatory lenders have high interest rates in order to bring in additional profit1. For example if a borrower with poor credit qualifies for a home loan at an interest rate of 12%, the predatory will charge 14% or even 17%. By doing this and then adding the prepayment penalties, the lender ensures that the only ...
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