When the balloon payments cannot be met, the lender helps to refinance again with another high-interest, high-fee loan.
This occurs when a monthly loan payment is too small to cover even the interest, which gets added to the unpaid balance.
Get Financial Help Now By definition, predatory lending benefits the lender and ignores or hinders the borrower’s ability to repay the debt.
The lender targets limited-resource neighborhoods that conventional banks may shy away from.
Predatory lending is any lending practice that imposes unfair or abusive loan terms on a borrower.
It is also any practice that convinces a borrower to accept unfair terms through deceptive, coercive, exploitative or unscrupulous actions for a loan that a borrower doesn’t need, doesn’t want or can’t afford.
These lenders also target borrowers with credit problems or people who recently lost their jobs.
This could disqualify them from conventional loans or lines of credit, even though they have substantial equity in their homes.