Examples of unfair practices mentioned in guidelines against Predatory and Abusive Lending includes loan flipping and loan equity stripping. It is said that:
Examples of unfair practices mentioned in guidelines against Predatory and Abusive Lending includes loan flipping and loan equity stripping. It is said that:
Loan flipping may be unfair because it increases the chances of foreclosure by decreasing home equity and increasing debt burden. Equity stripping may also be unfair because it increases the chances of foreclosure by decreasing home equity and increasing debt burden. The definitions provided in options A and D correctly describe the unfair practices associated with predatory and abusive lending.
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These options accurately describe why loan flipping and equity stripping are considered unfair practices. Loan flipping involves frequent refinancing that benefits the lender through fees and penalties at the expense of the borrower's equity, increasing the risk of foreclosure. Equity stripping involves making loans with high upfront fees that are financed, diminishing the borrower's equity in their home.