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Predatory lending is the practice of using a borrower’s ignorance against them for profit. It is often referred to as an affliction that only strikes racial minorities, women, and the elderly. While these groups are certainly prone for victimization, for which the ramifications cut far deeper and are often life-altering, predatory lending runs silently unregulated amongst all demographics.

Predatory lending can be identified by deceptive marketing and sales practices, non-disclosure of all terms that relate to the qualification and payback of the loan, and falsifying documentation to gain otherwise unattainable loan approvals, although the actual term is an umbrella to numerous specific scenarios.

Profits as indicators of Predatory Lending

Some lenders target elderly homeowners who have considerable equity in their homes, and who might be more easily deceived or coerced into taking out a mortgage loan that they cannot afford to pay back.

A broker may originate a loan to a borrower knowing they do not have enough cash flow to make the monthly payments and then immediately sell the loan to a secondary market investor. When the borrower defaults, they and the funding lender are damaged-not the broker.

Sadly, in many cases where a person with large credit card debt (i. e. (Minimum 540 Credit Score).