Nobody downloaded yet

Predatory Practices in financial borrowing and lending contracts - Research Paper Example

Comments (0) Cite this document
In financial borrowing and lending contracts, predatory practices are actions and omissions that target weak, ignorant, and vulnerable people such as women and men new or not knowledgeable in the field of money lending…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER91.8% of users find it useful
Predatory Practices in financial borrowing and lending contracts
Read TextPreview

Extract of sample "Predatory Practices in financial borrowing and lending contracts"

Download file to see previous pages Predatory Practices in financial borrowing and lending contracts

The following are some of the characteristics of predatory practices in money lending. First, those targeted are chiefly the low income people and the elderly in society. Second, the loans’ costs and terms often change at the closing and differ greatly from what they were at the beginning or what was agreed. Predatory practices are also often accompanied by aggressive sale approaches. There are also repeated re-financing options after a short time lapse so that lenders end up collecting addition fee or penalties, consequently denying borrowers such as home owners the equities from their security. Notably, in most of predatory lending practices, the lending is not often in line with the borrower’s capacity to repay since the lender’s center of attention is often the foreclosure. In addition, the vulnerable borrower is always unaware of the underlying truths of the truth, terms, conditions, and consequences of the deal (“Predatory Lending” 4). That is, there is always quite a lot of misunderstanding about the nature of loan and the amount to be repaid since such transactions has high but hidden fees that could be hidden from the borrower’s eyes. The borrowers are often tricked by the aggressive sales. Most affected in this regard are uninformed groups, which end up borrowing under unfair loan terms. Due to the harmful effects of such loans to society, the government has numerous remedies in form of laws and regulations. These remedies include the Equal Credit Opportunity Act (ECOA), the Real Estate Settlement Procedures Act (RESPA), the Home Ownership and Equity Protection Act (HOEPA), and the Truth in Lending Act (TILA). Others are the Fair Housing Act, and the Federal Trade Commission Act, and Special State Anti-predatory Lending Statutes, in State Unfair and Deceptive Trade Practices Acts, and common law fraud and unconscionability. This paper explores some of the predatory practices in lending, pointing out and explaining the parties’ responsibilities. Predatory Practices Predatory lending practices are not only unfair but also fraudulent and deceptive. In other terms, predatory lending entails the imposition of abusive and unfair terms on loans for borrowers. In fact, the phrase ‘predatory lending” generally refers to many specific illegal activities in the loan sector. Nonetheless, different states have various laws against each specific type of illegal loan activity. Notice should be taken about the distinction between predatory lending and predatory mortgage servicing. The latter refers to the deceptive, fraudulent, and unjust practices of lenders and servicing agents in loan or mortgage servicing processes. Unlike predatory lending, this latter activity takes place post loan origination. An example of a predatory practice is that of a lender deceptively convincing a potential borrower to accept an unfair and abusive loan term (Nasiripour 122). Second, a lender may methodically breach the terms so that the borrower finds it hard to defend against it (Aleo and Svirsky 119). These predatory practices may be done through certain types of credit cards, largely subprime, payday loans, and overdraft loans. In all these cases, the lender may set the interest rates at considerably and unreasonably high levels. Mostly targeted by predatory loan lenders are borrowers with some collateral to back their loan requests. This collateral could be a car or a house, which the ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
(“Predatory Practices in financial borrowing and lending contracts Research Paper”, n.d.)
Predatory Practices in financial borrowing and lending contracts Research Paper. Retrieved from
(Predatory Practices in Financial Borrowing and Lending Contracts Research Paper)
Predatory Practices in Financial Borrowing and Lending Contracts Research Paper.
“Predatory Practices in Financial Borrowing and Lending Contracts Research Paper”, n.d.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF Predatory Practices in financial borrowing and lending contracts

Predatory Globalization: A Critique

...SUMMARY OF Richard Falk's Predatory Globalization: A Critique United Nations reform came mainly in the form of expansion of the UNSC. Western countries insisted that new permanent membership in the UNSC should be based on the capacity to contribute. This means that only Germany and Japan can become candidates as new members. Many UN activities have been adversely affected by the financial crisis the organization faces. Falk says that the necessary political conditions to ensure the effectiveness of reforms are not present to make them successful. Reforms fall short in meeting contemporary challenges and opportunities faced by the UN. This "modesty" stems from the strategic interests and geopolitical...
4 Pages(1000 words)Essay

Financial Institutions Lending

...of debt a company has relative to its assets. It is calculated by dividing total debts by total assets. A debt ratio of greater than1 indicates that a company has more debt than assets -a debt ratio of less than 1 indicates thata company has more assets than debt. Used in conjunction with other measures of financial health, the debt ratio can help investors determine a company's level of risk. 2. Loan to Value Ratio A lending risk assessment ratio that financial institutions and others lenders examine before approving a mortgage.Typically,assessments with high LTV ratios are generally seen as higher risk and, therefore, if themortgage is accepted,the loanwill generally cost the...
4 Pages(1000 words)Essay

Lending Decision

...Lending Decision Lending Decision Titus Manickam Order No. 183523 02 October 2007 (Rejoinder to my report of 28 September 2007) Lending Decision (A Rejoinder) Performance Forecast for Coles Group Limited Coles performance during FY 2007 is quite dismal at a decrease of 9.5 percent in profits from its return on Food and Liquor business. This is difficult to understand in a booming economy where everyone in the competition is doing well. For Wesfarmers, who are on the verge of taking over Coles, it is bad news. However, a judicious mix of fast action (shape up or ship out) at the top and middle management levels, training and empowerment at the bottom level must...
2 Pages(500 words)Case Study

Predatory Lending Practices

...Predatory Lending Practices Yvonne L. Academia Research The economic sector has recognized the growing fame of check cashing and lending businesses. Its magnitude of growth has widely targeted most communities from several billions of dollars in equity and people are loosing their homes. Predatory practices have been recognized as the draining point of home foreclosures. Such abusive practice without tangible benefits to the borrower has affected vulnerable citizens and is a cause for concern. Policies that support consumer protection against predatory practices are enhanced through research that work its way to disseminate to the business management groups that favors mutual beneficial relations to the lender and the borrower... ...
6 Pages(1500 words)Essay

Market and Bank Financial Lending Systems

...$150) came out to be $1,950 13. The new terms also included a new $8,500 closing cost. You could imagine the grief Mr. Morneau went through to attempt to re-build his credit from months of difficult payments, and unfortunately, also had to take loans from the same Bank to help pay off the mortgage. This is just an inkling of the shadows looming over bank lending. Banks are concerned with one thing, their own financial situation. This in no way considers the benefit of the community nor the public. Granted, America has a lot of debt to take care of at the moment, but it is always said that you must spend money to make money. Since the induction of many predatory loaning techniques...
12 Pages(3000 words)Essay

Predatory Crime

...criminals. Secondly, all the circumstances which makes the use of crime ethical and legitimate to the individuals. Like unemployment, poverty etc. The third context refers to all those individuals who are now leading a successful life by transforming into thriving criminals and taking 'any form' of predatory crime as a profession. These expert thieves are sometimes affiliated with musclemen or organizers in a fourth context of rational crimes, the context in which crime becomes an economic enterprise fulfilling the demands of a market (Ferrington, 1991). The factors, which are involved in each of the above-mentioned contexts, are: 1. Worse economic and financial conditions, which lead to awful...
3 Pages(750 words)Essay

Predatory lending

... Topic: Predatory Lending Lecturer: Presentation: Introduction Predatory lending is the practice whereby a person in need of a loan is convinced by a lender to accept the terms of the loan based on misinformation (Luhby 2009). To achieve this, the lenders conceal important details which could be helpful to the person applying for the loan so as to make them believe that they are at an advantage. As a result, the borrower is forced to pay loans with larger interest rates than is fair. This essay is an evaluation of predatory lending and its influence on the recent mortgage debt crisis. How Predatory Lending Relate to the Recent Mortgage Debt Crisis These lenders mostly target those borrowers with little knowledge on money matters... ,...
2 Pages(500 words)Essay

Consumer Borrowing

...the maturity, the saver would receive the principle plus interest. In other situation, the bank can use the saver’s money to lend a consumer willing to borrow US$30,000 to finance the purchase of a new car. In this case, the financial intermediary will charge a specified interest rate higher than what it will pay to its original depositor. The borrower would pay monthly installments which would include the principle plus interest. If there were no financial intermediaries, borrowers have to personally search for savers to meet their funds requirements and involve in direct dealing which would be costlier than the...
2 Pages(500 words)Essay

Ethical issues in Financial Companies Lending practices

...Ethical Issues in Financial Lending Ethical Issues in Financial Lending The phenomena of globalization and liberalization of the market economy have had tremendous impact on the commercial practices of many sectors all round the globe. Financial institutions have remained the chief movers and shakers that determine the pace of development across many sectors. Their lending strategies and policies have therefore become the determinants of values, mores and ethics which are invariably attached to the sphere of commerce. According to Jennings (2005), financial institutions play the role of reservoirs that...
8 Pages(2000 words)Research Paper

UK Financial Services - Case Study on Borrowing

...UK Financial Services- Case Study on Borrowing Financial Providers in UK Among the financial providers with whom Jamal could apply for a credit card is Capital One, a diversified bank that offers its customers a range of financial services in America, the UK and Canada. Capital One specializes in credit cards, auto loans, and home loans, banking, and savings services. The company has four divisions which include Capital One Auto Finance, Capital One 360, The National Direct Bank as well as divisions in Canada and the UK. Its headquarters in UK is in Nottingham (Wachter, Cho & Tcha 2014, p.45). The Santander Group, an alternative credit card provider, is...
4 Pages(1000 words)Coursework
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Research Paper on topic Predatory Practices in financial borrowing and lending contracts for FREE!

Contact Us