Often, the lender requires the homeowner to transfer half ownership of the house to the co-signer. The homeowner thereby loses half the ownership of the home and is saddled with a loan she cannot afford to repay. Some predatory lenders make loans to homeowners who are clearly mentally incapacitated. They take advantage of the fact that the homeowner does not understand the nature of the transaction or the papers that she signs. Because of her incapacity, the homeowner does not understand that she has a mortgage loan, does not make the payments, and is subject to foreclosure and subsequent eviction.
Some predatory lenders forge loan documents.
In such cases, the unwary homeowners are stuck with loans they know nothing about. High Annual Interest Rates. Because the purpose of engaging in predatory lending is to reap the benefit of high profits, these lenders always charge extremely high interest rates. This drastically increases the cost of borrowing for homeowners, even though the lenders' risk is minimal or non-existent. Legitimate lenders charge points to borrowers who wish to buy down the interest rate on the loan.