A foreclosure litigation attorney will help their clients consider all their claims against their lender and loan servicer. One area of claims that receives a lot of attention is predatory lending. Predatory lending is a claim that the bank has engaged in abusive lending practices. Such claims are not new, but homeowners have begun to realize the predatory nature of their loans as they adjust over time. Predatory lending has become shorthand of describing a variety of lending practices that may be disadvantageous to borrowers. Abusive or predatory lending are usually undertaken by creditors, mortgage brokers or home improvement contractors, who manipulate borrowers through aggressive sales tactics or taking unfair advantage of a borrower’s lack of understanding about loan terms. These practices occur most frequently in the subprime lending market and target lower-income and minority borrowers. In Riverside and San Bernardino, I have seen a large increase in these types of loans, particularly in newer developments in the Inland Empire.
One thing that people should be aware of is that predatory lenders use a lot of techniques of abusive practices when putting together a loan. Usually, predatory lenders target those who are elders, low-income families, and minority groups. Predatory loans usually contain inflated rates and disguised fees so that there is no way the borrower can repay what he or she have borrowed. Also predatory lenders often add insurance and other unnecessary products to the loan amount that consist of other insurances such as home or health insurance. These premium items are usually added without the borrowers consent and are usually not spotted easily. Therefore, the predatory lender generates large commissions while leaving borrowers with a loan that is virtually guaranteed to default. One common feature of a predatory loan is the adjustable-rate nature of many loan. As these interest rates adjust in the future, a homeowner is left with a loan payment they may not be able to afford. All subprime lending is not predatory but typically relies on risk based on pricing to serve borrowers who cannot obtain credit in the prime market. Other predaotry lending claims allege discriminatory practices, claiming disparate treatment of groups based on race or other demographic characteristics. Some plaintiffs seek injunctive relief, while others seek monetary damages.
In general, current federal legislation focuses on communicating information to borrowers in order to help them make informed choices about financial products. Unfortunately, consumers are often not able to use the available information to their advantage or are not provided that information by their predatory lenders. In many cases, they do not understand the financial transactions, or lack confidence about financial issues. As a result consumer education should be used to teach potential borrowers about financial issues and empower them to make good financial choices.
At De Novo Law Firm, our foreclosure litigation attorneys have tried numerous cases involving claims of predatory lending. De Novo Law Firm has successfully settled predatory lending cases for borrowers with loans that adjusted beyond their capacity to pay. If you or someone you know is condering suing their lender to protect their home, contact De Novo Law Firm at (951) 801-5570 for a free consultation.