Predatory lending definition reveals flaws

Ambiguous wording allows for wide interpretation
Published on Nov 8, 2004

"The California Mortgage Brokers Association has recently come out with a definition of 'predatory lending,' which it claims will allow borrowers to protect themselves. Do you agree?" I think they get an A for effort, and are on the right track in equating predatory lending with price-gouging. However, the execution is a bit muddled. Here is their definition: "Predatory lending is defined as intentionally placing consumers in loan products with significantly worse terms and/or higher costs than loans offered to similarly qualified consumers in the region for the primary purpose of enriching the originator and with little or no regard for the costs to the consumer." The Standard: According to this definition, a loan is predatory if the terms are unfavorable relative to other loans "offered to similarly qualified borrowers." But this is incomplete. The other loans to which the subject loan is compared must be identical with regard not only to borrower qualifications, but also with reg...