Predatory Lending and Steering Definitions

What is an example of predatory lending behavior?

Which of the following actions would NOT be considered predatory lending?

How can a lender take advantage of borrowers who do not read their loan documents?

What constitutes predatory lending when it involves borrower deception?

What is a common practice in predatory lending regarding loan applications?

What is the main objective of predatory lending?

Which of the following is NOT considered a prohibited practice of predatory lending?

What does the practice of 'steering' involve?

Which of the following is a consequence lenders may face for engaging in illegal steering practices?

How can deception manifest in predatory lending scenarios?

Which federal rules does the practice of steering violate?

What type of loan could be classified as mortgage steering?

Who can be guilty of steering in the context of real estate transactions?

Predatory Lending Defined

Predatory lending exploits vulnerable borrowers.
It involves excessive fees, misleading loan terms, frequent (non-beneficial) refinancing, and other prohibited acts.
Targets consumers lacking understanding of loans and processes.
Regulations demand clear disclosures and prohibit specific practices.

Steering Defined

Steering is influencing a buyer's or tenant's choice of housing based on bias or discrimination.
Includes influencing seller's decision on offers with bias.
Can be committed by lenders, real estate agents or anyone influencing consumer choices.
Steering in loan choices is illegal (e.g., directing to higher-cost FHA loans when a conventional loan is possible).
Violations can lead to significant fines, penalties, reputational damage, and license revocation.

Predatory Lending Scenarios

Deception: Loan originators or lenders deceive borrowers.
Misrepresenting occupancy, disguising as gifts, misrepresenting income for low-income programs, concealing unfavorable loan terms, or helping conceal property defects are all predatory acts.
Relying on the mortgage loan officer (MLO) for understanding while signing loan documents without reading is a predatory practice.
Promising advantageous refinancing prior to unfavorable terms becoming effective is predatory.
Hiding or covering up property (collateral) defects/conditions is predatory.
Deception, misrepresentation, or unethical conduct by the lender—regardless of borrower participation—is considered predatory lending.

This quiz explores the definitions and implications of predatory lending and steering in housing markets. Learn about the unethical practices that exploit borrowers and the consequences of discriminatory actions in loan choices. Understanding these concepts is vital for protecting consumer rights in financial transactions.