What are some examples of predatory lending practices?

Predatory lending practices are when mortgage lenders use unscrupulous tactics to take advantage of people wanting to buy property or homeowners. Predatory lending typically involves people being talked into or pressured into taking mortgage loans that they can’t afford. This means that mortgage lenders base their mortgage approvals on people’s assets instead of their ability to pay the mortgage over the life of the mortgage loan. According to NeighborWorks America, predatory lending practices are usually used on the elderly, lower-income and minority. However, predatory lending can happen to anyone who doesn’t understand the real estate process.

An example of predatory lending practices is the terms of the mortgage. For instance, the lender may include a balloon payment due in the middle of the mortgage. This means that a homeowner may have a 15 year mortgage with set amount of money to pay each month. However, in the 13th year of the mortgage, the total balance is due. In another instance is that people are offered loans that—on the surface—look like they can afford, but in reality they can’t. For instance, a person may only make less than $20,000, but are given $500,000 mortgage.

Predatory lending is extremely serious and complicated business. For any homeowners affected by predatory lending practices should seek legal help. A real estate lawyer who specializes in fighting against predatory lending practices can help anyone facing foreclosure of predatory lenders.