Don't risk your home. Watch out for predatory lending.
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The principles of responsible lending

In an effort to curb this practice, we are calling on financial institutions to follow these Principles for Responsible Lending to both end predatory practices and to provide credit in a fair manner, free of discrimination and harm.

  1. Targeting and outreach: Lenders will not target minorities or the elderly for loan products that are higher priced than the products aimed at the general population.

  2. Loan fees: No consumer loans will be charged with up-front charges greater than five percent of the loan amount.

  3. Rates: Interest rates are set by a nondiscriminatory, consistent and rational method in which price relates to actual risk.

  4. Commitment to Equal Opportunity and Fair Housing Laws: Lenders will demonstrate there is no discrimination in the terms and conditions charged on loans to minority or elderly borrowers through testing by an outside agency.

  5. Prepayment: No prepayment penalty will be offered on subprime products that are not offered on prime credit products.

  6. Steering: Lenders will not provide employee or third party incentives to steer minority, elderly, or low-wealth borrowers to loans that have higher fees or interest rates than the borrower's credit history would warrant.

  7. Credit insurance and loan packing: Credit insurance and other loan extras, if offered at all, will be paid for on a monthly basis by the borrower, and not added to the initial loan amount such that additional ongoing interest payments are incurred.

  8. Flipping: No repeated refinancing of loans, where the cost of the loan in fees and rates harms rather than helps the borrower.

  9. Yield spread premiums: Firms will neither pay nor receive indirect compensation from lenders to loan brokers that is tied to the terms of the brokered loan.

  10. Financing of subprime lenders: Financial institutions will not make direct or indirect investments or financing for other firms with a documented history of predatory lending practices.

  11. Credit reporting: Lenders will make a commitment to report accurately to credit bureaus the payment records of low-wealth borrowers so that favorable refinancing is a viable option for the borrower.