Predatory Lending

Definition

  • Actions carried out by a lender during the loan origination process that are unfair, deceptive or fraudulent. Examples of predatory lending practices include approving mortgages to individuals who have a high chance of defaulting on a loan, or charging usury (disproportionally high) interest rates.

Synonyms
unfair lending practices, deceptive lending practices, fruadulent lending practices, usury

Acronyms
PL

Related Terms and Acronyms

  • Bad Credit Definition,
    • Someone who carries a higher credit risk.
  • Bad Credit Loan Definition,
    • A loan taken out by someone with bad credit.
  • Housing Discrimination Definition,
    • The illegal practice of discriminating against buyers or renters of dwellings on the basis of race, colour, religion, national origin, sex, family status or disability.
  • Loan Shark Definition,
    • A lender that provides loans at usuriously high interest rates, often ensuring repayment with the threat of force.
  • Payday Loan Definition,
    • A short-term loan with an extremely high interest rate.
  • Sub-prime Borrower Definition,
    • A borrower with a less-than-perfect credit report due to late payments or a default on debt payments.
  • Sub-prime Mortgage Definition, Important,
    • A mortgage loan that is granted to a borrower who is considered sub-prime (has a less-than-perfect credit report). Sub-prime borrowers have either missed payments on a debt or have made late payments. Lenders charge a higher interest rate to compensate for potential losses from customers who may default on the loan.
  • Title Loan Definition,
    • A loan that uses a car as collateral.
  • Usurious Rate Definition,
    • An interest rate that is unnecessarily high or well above legal rates. For example, sometimes intangible property taxes are applied to income from usurious rates.
  • Usury Definition,
    • Illegal, excessive interest.
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