Description:
Predatory lending is lending practices that take advantage of consumers, leading to escessive profits for the lender and little or no benefit to the consumer. These practices include, but are not limited to charging an unjustifiably high risk premium, excessive prepayment penalties, high fees, and lump-sum payment insurance premiums included as part of the loan. Predatory lenders often lend without regard to the consumer's ability to repay the loan. Predatory appraisals are false appraisals that value the property above its true value, which can result in a loss of equity and higher fees. Both predatory lending and appraisals cause increased foreclosures and endanger the stability of homeownership. Federal and state laws restrict terms of high-cost mortgage lending through the Homeowner's Protection Act and the Homeownership and Equity Protection Act (HOEPA).