Predatory lending is a term that encompasses the fraudulent, misleading, or unfair practices that a lender may engage in during a loan origination. These types of practices result in abusive loan terms for the borrowers that benefit the lender at the expense of the borrower. Another way lenders can engage in predatory behavior is to violate the terms of the loan in such a manner that the borrower doesn’t understand or cannot easily defend against. Where borrowers are taken advantage of out of greed on the part of the lender, predatory practices may be present.
Predatory lending includes preying on the elderly, minorities, and low-income borrowers with coercive tactics (such as those made in subprime loan), and are not in the best interests of the borrowers. These practices can also include excessive or unnecessary fees such as those which are 5 percent or more of the total loan amount that is hidden back into the total amount due. Predatory lenders may also tack on various kinds of insurance for the borrower as well as other family members and other unnecessary products. Insurance premiums can often be added onto the loan amount without the borrower’s knowledge, resulting in more profits for the lender. Another abusive tactic is creating excessive prepayment penalties that the borrower must pay if the borrower wants to pay the loan off before its due date. In cases where a homeowner is stuck with a high-interest loan, this penalty makes it difficult to refinance or can result in a loss of equity or further debt.
Hidden balloon payments and mandatory arbitration clauses are additional forms of predatory lending. A mandatory arbitration clause prevents a borrower from being able to take a lender to court, requiring him to go through arbitration should a dispute arise, that favors the lender.
Get Help from a Long Island Foreclosure Defense Lawyer
If you are facing a pending foreclosure and believe you have been victimized by predatory lending practices, it is important that you get legal assistance from a Long Island foreclosure defense attorney at the Law Firm of R. David Marquez, P.C. An attorney at the firm can analyze your loan documents and circumstances to identify any abusive or deceptive practices that may invalidate the foreclosure process.
Contact a Long Island foreclosure defense attorney at the firm if you have been subject to predatory lending tactics by your lender today.
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