Sign In
Not register? Register Now!
Essay Available:
You are here: HomeEssayBusiness & Marketing
1 page/≈275 words
Business & Marketing
English (U.S.)
MS Word
Total cost:
$ 4.32

Predatory lending (Essay Sample)


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

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 way for the borrower is to either pay off the mortgage plus the interest or lose the property to the fore-closure.
The prepayment penalties of predatory lending are aggressive. When a borrower sells his house or refinances it, he or she expects to pay off the remainder of his or her home loan to the original lender1. What he or she may not expect, is to pay the full amount he or she owes for the house plus all the interest that he or she should have paid if the loan had run for its full term and this happens with the predatory lending. Many home loans stipulate a prepayment penalty for a certain time. As years pass, the prepayment penalties reduce and after several years there is a reduction of the penalty. In predatory home loans, this is not the case. The predatory lenders lock the homeowners to a high loan interest resulting to homeowners unable to sell or refinance the home.
In conclusion, the fact is that homeowners do not ben...
Get the Whole Paper!
Not exactly what you need?
Do you need a custom essay? Order right now:

Other Topics:

  • The Exploration Of Relationships Between Countries
    Description: International Relations is the exploration of relationships between countries, the functions of international organizations, supreme states ...
    2 pages/≈550 words| 3 Sources | Turabian | Business & Marketing | Essay |
  • Global Garment Industry CSR Research Assignment Paper
    Description: Discuss the CSR role and obligation of Global Garment Industry . Include three academic sources from relevant bodies or libraries....
    1 page/≈275 words| 3 Sources | Turabian | Business & Marketing | Essay |
  • Predatory lending
    Description: Predatory lending Business and Marketing Essay Undergraduate level...
    1 page/≈275 words| Turabian | Business & Marketing | Essay |
Need a Custom Essay Written?
First time 15% Discount!