Predatory Lending Research Paper

Predatory lending is unfair and abusive lending practices that convince borrowers who are not adequately knowledgeable in financial matters and who do not have high enough credit score to get a loan at standard condition, to accept the extremely unfavorable credit conditions. Predators lenders’ extremely unfavorable credit conditions that are set such terrible conditions that borrower pay increased loan fees, and higher rates and sometimes the loan terms can cause borrower to lose a significant portion of his own funds or property. Generally, predatory lending strategies include tricking the clients, taking advantage of customer’s lack of knowledge on finance matters, not revealing or hiding the real lending terms, and applying forceful sales techniques.
“Predatory lending practice may involve lenders, mortgage brokers, real estate brokers, and home improvement contractors” (Predatory Lending). These predators who try to take advantage of borrowers lack of understanding about the loan terms seek their prey from the people who are poor, needy, elderly, and sick, who have little or no access to credit and all the other people who are easy to exploit. “Lenders may also target minority communities by advertising in a specific language” (Predatory Lending). In their article A True Story of Predatory Lending, Harris and Larson state “predators also target the minority groups such as black and Latino barrowers than white.” “The abuse of subprime loans in minority neighborhoods is evidence by a government study in an African American neighborhood showing over 51 percent of the refinanced mortgages being subprime, compared to only 9 percent in predominantly white neighborhoods” (What is Predatory Lending). In their article, Harish and Larson also states that “Wells Fargo & Co. targets black and Latino borrowers for more costly home loans than their white