What is subprime and predatory lending?
Subprime lending is directed primarily to borrowers who do not qualify for conventional loans. Such borrowers may be low-income or they may have a bad credit history. Because subprime loans are more risky than conventional loans, they usually have higher interest rates and fees. But they also play an important role in the home lending market where they can increase home ownership, improve the financial resources of the borrower and contribute to safer, more stable communities. Predatory lending is a form of subprime lending characterized by unscrupulous or unethical lending practices. These practices can include the application of excessively high fees and interest rates, the use of balloon payments, flipping (successive refinancing of the original loan at increasingly higher rates), packing (linking the issuance of the loan to the purchase of some form of insurance) and steering (directing otherwise credit-worthy borrowers into high-priced subprime loans). Predatory lending tends to t
