financial scams
Predatory Loan Practices
People with financial problems are often victimized by predatory lenders, such as unscrupulous loan or mortgage providers. Using high-pressure sales, sophisticated marketing tools, and confusing contracts, these scammers prey on those who are most vulnerable. “Flipping” is a common predatory loan practice. How does it work?
- The lender offers the borrower a new loan and then refuses to process it.
- The lender refinances a loan to generate fee income without providing any true benefit to the borrower.
- The lender steals the borrower’s identity and takes out a new loan.
“B” is correct. Dishonest lenders may also: Steer the borrower to their most expensive loan product; charge excessive hidden fees; include a prepayment clause that makes it impossible for the victim to pay off the loan early without a penalty; or take a kickback.