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
fruadulent lending practices, unfair lending practices, usury, deceptive lending practices
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.
