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Lend up Prequalified Code

Lend up Prequalified Code

Classic predatory lending centers around home mortgages. Because home loans are backed by a borrower’s real property, a predatory lender can profit not only from loan terms stacked in their favor but also from the sale of a foreclosed home if a borrower defaults. Subprime loans aren’t automatically predatory. Their higher interest rates, banks would argue, reflect the greater cost of riskier lending to consumers with flawed credit. But even without deceptive practices, a subprime loan is riskier for borrowers because of the tremendous financial burden it represents. With the explosive growth of subprime loans came the potential for predatory lending.

When the housing market crashed, and a foreclosure crisis precipitated the Great Recession, homeowners with subprime mortgages became vulnerable. Subprime loans came to represent a disproportionate percentage of residential foreclosures. Black and Latino/Latina homeowners were particularly affected.

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Lendup Prequalified Code

Lendup Prequalified Code

Predatory lending includes any unscrupulous practices carried out by lenders to persuade borrowers to take out loans they are unable to pay back or must pay back at a cost that is extremely above the market rate. Predatory lenders take advantage of borrowers' circumstances or lack of knowledge.1

A loan shark, for instance, is the archetypal example of a predatory lender—someone who loans money at an extremely high interest rate and may even threaten violence to collect on their debts. However, a great deal of predatory lending is carried out by more established institutions like banks, finance companies, mortgage brokers, attorneys, or real estate contractors.

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Lendup.com Prequalified Code

Lendup.com Prequalified Code

Predatory lending typically means imposing unfair, deceptive, or abusive loan terms on borrowers. In many cases, these loans carry high fees and interest rates, strip the borrower of equity, or place a creditworthy borrower in a lower credit-rated (and more expensive) loan, all to the lender's benefit.

Predatory lenders often use aggressive sales tactics and exploit borrowers’ lack of understanding of financial transactions. Through deceptive or fraudulent actions and a lack of transparency, they entice, induce, and assist a borrower in taking out a loan they will not reasonably be able to pay back.