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The Lure of High-Risk Loans: Huge Profits Drive Practice's Spread Despite Lawsuits

Date: July 12, 2004
Authors: Jonathan Finer and Charles R. Babcock
QUOTE: The suits accused the banks of predatory, or abusive, lending by using deceptive and high-pressure tactics to market high-price loans to people without regard for their ability to repay.

ABSTRACT: High-risk loans are causing borrowers to pay as high as 17 percent closing costs and file suits against banks in Virginia and Florida. Differences in state laws and massive use of mail solicitation by lenders have made predatory lending hard to monitor. Uninformed consumers are vulnerable to taking out high-risk loans they cannot repay while predatory lenders show little concern for whether or not the loan can be repaid.

--- A. Willing

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