Boston Bankruptcy Lawyer
Predatory Lending
Predatory lending is a term used to describe the lending practices of some lenders. There are no legal definitions in the United States for predatory lending although there are laws against many of the specific practices commonly identified as predatory. Various federal agencies use the term as a catch-all term for many of the specific illegal activities in the loan industry.
A less contentious definition of the term is “the practice of a lender deceptively convincing borrowers to agree to unfair and abusive loan terms, or systematically violating those terms in ways that make it difficult for the borrower to defend against.” Payday loans, credit cards and other forms of consumer debt, and overdraft loans are also considered types of predatory lending. The biggest indicator of a predatory lending practice is the unreasonably high interest rate.
Predatory lenders are more likely to target the less educated, racial minorities, and the elderly. While this is true, the victims of predatory lending practices are represented across all demographics.
Predatory lending frequently occurs on loans backed by some kid of collateral. Collateral will frequently be a car or a house. This way, if the borrower defaults on the loan, the lender can repossess or foreclose and then profit by selling the repossessed or foreclosed property.
A number of lending practices which have been called abusive and are labeled with the term “predatory lending” exist. There is a great deal of dispute between lenders and consumer groups as to what is really an “unfair” or “predatory” practice. Some of the practices cited include:
- Risk-based pricing
- Single premium credit insurance
- Failure to disclose negotiable loan price
- Failure to disclose terms and conditions clearly and accurately
- Short-term loans with disproportionally high fees
- Servicing agent and securitization abuses
Contact a Boston Bankruptcy Lawyer
If you are in a dire financial situation, contact the Boston bankruptcy lawyers of Joshua Spirn & Associates at 1-800-975-5346 to discuss your case and to determine your legal options.
