Home equity loans The basics
What do the terms of predatory loans look like? Predatory lenders offer mortgage loans that not only have high interest rates, they come with an array of unethical fees and riders. If you see these fees, think twice: • Prepayment penalties. Predatory lenders want to force borrowers to stay with them for as long as possible, so they penalize borrowers for repaying the mortgage loan before the end of the term. Occasionally, a nonpredatory loan may have a prepayment penalty for repaying the loan within one to three years, a term short enough that it is unlikely to pose a problem to the average homeowner. However, predatory loans frequently charge penalties for terms far longer than three years.