Predatory Lending

Predatory lending is any lending practice that enables a party (lender) to obtain a Security interest (mortgage or deed of trust) in your home’s equity or charge and collect inappropriate fees or costs by negligence, fraud, deceit, fiduciary breach, criminal act or violation of statute. Instances of predatory lending can frequently be seen in loan documents and can be grounds for damage lawsuits against lenders or the basis for affirmative defenses in foreclosure litigation.

Some of the more common examples of predatory lending are:

• Brokering a loan with a higher interest rate despite the borrower’s ability to qualify for lower interest interest rates or more favorable terms
  
• Putting a borrower into a loan with little or no regard for the borrower’s ability to pay
  
• Repeated re-financing with no benefit to the borrower
  
• Using higher interest rate refinance loans to pay off lower interest rate loans
  
• Excessive prepayment penalties which lock borrowers into high rate loans
  
• High annual interest rates and high points and closing costs
  
• Undisclosed negative amortization
  
• Loans in excess of 100% loan to value
  
• Undisclosed or inadequately disclosed ARM adjustments
  
• Bogus fees
  
• Failing to provide the borrower with a translated version of the loan documents if the loan was solicited and negotiated in a language other than English
  
• Broker kick back schemes "Yield Spread Premiums"
  

A forensic analysis of your loan documents will reveal if predatory lending tactics were utilized in processing your loan. It is estimated that as many as 70% of the sub prime and 50% of prime loans funded since 2005 involve instances of predatory lending. The discovery of predatory lending may give rise to a right of recision of the loan as well as be a powerful tool to force a lender to call off a foreclosure or modify the existing loan.


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