Such activities destroy the very areas that community investors are working so hard to build. Click here to read an example of predatory lending and its devastating results. Subprime lenders focus on individuals who do not qualify for loans from traditional financial institutions. Predatory lenders deliberately put borrowers with good credit into loans with high interest rates and away from more affordable options. Unnecessary insurance .
Predatory lenders jack up the cost of credit by needlessly selling insurance to borrowers.
Often financed over the life of the loan, these insurance policies include credit life, credit disability and involuntary unemployment insurance. The premiums are often staggeringly high even though the pay-out on these insurance policies is very low. Prepayment penalties . Charging prepayment penalties designed to lock borrowers into predatory loans for as long as possible makes it extremely difficult or even impossible for borrowers to refinance or otherwise get out from under loans. Loan flipping involves the repeated refinancing of the loan by rolling the balance of an existing loan into a new loan.