Question

In: Economics

state and explain possible alternatives to solving predatory lending practices?

state and explain possible alternatives to solving predatory lending practices?

Solutions

Expert Solution

Solution -

predatory lending practices


There is some disagreement about the practice of deadly debt, but many actions such as disclosing or disclosing wrong information, risk-based pricing and increased fees and fees are mentioned. There are other violent methods like loan packing, loan flipping, asset-based loans and reverse redlining.

Insufficient or incorrect disclosure


The borrower conceals or misrepresents the true cost, risk and / or the eligibility of the terms of the loan, or the loan amount changes the terms of the loan after the initial offer.

Risk-based Price


All borrower relies on some types of risk-based costs - interest rates on credit history - violent borrowers resort to higher interest rates to study by resorting to high rates of interest which are usually defaults.

Increased fees


Charges and expenditure (eg valuation, closing costs, document preparation fees) are more than the amount charged by reputable borrowers and often hidden in great print.

Loan packing


Unnecessary products like credit insurance - which repay loans at the death of home buyers - are included in the cost of the loan.

Loan flipping


The loan interest rate loan encourages a large amount of refinancing with higher interest rates and additional charges.


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