Predatory Lending
In today’s complex financial marketplace, consumers are more likely than ever to fall prey to deceptive predatory practices. Predatory mortgage lending, payday lending, and title lending threaten the ability of families to successfully build assets and avoid unnecessary debt.
Since the federal government has failed to curb abusive practices, many states have taken the lead in regulating predatory lending. Several states have curtailed abusive loan terms for mortgages, including excessive loan fees and prepayment penalties. In addition, several coalitions have successfully advocated for rate caps and other consumer protections on payday and title loans, which often trap consumers in endless cycles of debt.
Since the federal government has failed to curb abusive practices, many states have taken the lead in regulating predatory lending. Several states have curtailed abusive loan terms for mortgages, including excessive loan fees and prepayment penalties. In addition, several coalitions have successfully advocated for rate caps and other consumer protections on payday and title loans, which often trap consumers in endless cycles of debt.
Resources:
"North Carolina Consumers After Payday Lending: Attitudes and Experiences with Credit Options" (November 2007)
Description: This UNC Center for Community Capital study assesses the household credit market in North Carolina since the closure of payday lending stores in the state in 2006. Researchers concluded that the absence of storefront payday lending has had no significant impact on the availability of credit for households in North Carolina. Futhermore, more than twice as many former payday borrowers reported that the absence of payday lending ahs had a positive rather than a negative effect on their household.
HousingPolicy.org
Description: Developed and maintained by the Center for Housing Policy, HousingPolicy.org is an online guide to high-impact state and local policies that help to increase the supply of affordable homes for low-moderate income families. HousingPolicy.org also includes a broad range of state and local housing policy tools, as well as guidance on how to use these tools to create a comprehensive housing strategy.
8 Signs of Predatory Mortgage Lending
Description: Predatory mortgage lending involves a wide array of abusive and unethical business practices. The Center for Responsible Lending summarizes eight of the most common signs of a bad home loan.
"Financial Quicksand: Payday lending sinks borrowers in debt with $4.2 billion in predatory fees every year" (2006)
Description: Based on data collected by state regulators, financial records released by payday lenders, and assessments by third-party analysts, this Center for Responsible Lending report quantifies the cost of predatory payday lending to American families. Breaking down the impact by state, the paper also calculates the savings to families in states that have banned payday lending.
Consumer Federation of America (CFA)
Description: The CFA website provides many fact sheets and studies on payday loans and RALs.
