Predatory Lending

Predatory lending strips borrowers of home equity and threatens families with foreclosure. Often borrowers are tricked into accepting unfair loan terms, usually through aggressive sales tactics. Often they are taken advantage of because of their lack of understanding of terms and involvement in complicated transactions. Even more informed consumers are occasionally fooled. Anecdotal information suggests predatory lending is concentrated in poor and minority communities, where better loans are not readily available. Signals of predatory lending practices include, but are not limited to:

• Aggressive and deceptive marketing
• Making loans without ample consideration to the borrower's ability to pay
• Financing excessive fees into loans
• Charging higher interest rates than a borrower's credit allows
• Home improvement scams

Among the factors that contribute to predatory lending are the steering of minorities toward the subprime market, even when they qualify for prime loans with better terms, an inadequate number of mainstream lending institutions in minority neighborhoods, and a general lack of information in minority communities about available mortgage products.

Many consumers have already fallen prey to these lenders. Read more about HUD research and reports on predatory lending.

HUD is taking an active role in curbing predatory lending practices. This includes strategies to: 1) Improve consumer literacy and disclosures; 2) Prohibit harmful sales practices in the mortgage market; 3) Restrict abusive terms and conditions on high cost loans; 4) Improve market structure. Learn more about HUD's efforts to curb predatory lending.

Discrimination in mortgage lending is prohibited by the federal Fair Housing Act and HUD's Office of Fair Housing and Equal Opportunity actively enforces those provisions of the law. If you feel you your rights have been violated, the Housing Discrimination Complaint Form is available for you to download, complete and return, or complete online and submit, or you may write HUD a letter, or call the HUD Office nearest you. You have one year after an incident to file a complaint with HUD, but you should file it as soon as possible.