Financial fraud involves lending institutions which typically target the most vulnerable people in society.
These lenders are commonly referred to as “predatory lenders” and target minorities, the economically disadvantaged and the uneducated in an effort to realize huge profits. These lenders charge the borrowers higher rates of interest, require credit insurance products, require exorbitant up-front fees and include prepayment penalties. Most predatory lenders require the customer to purchase unnecessary credit insurance products. Additionally, these insurance products are grossly overpriced and essentially worthless to the consumer.
These companies engage in a practice known as “flipping” which involves a borrower constantly being flipped from one loan to another. This practice is extremely profitable to the lender, but devastating to the borrower’s ability to ever pay off the loan.
Another “predatory” practice known as “packing” involves unnecessary property, life and/or disability insurance being placed on the loan for no other reason, except the increased profit.
Another practice of the financial industry is known as “equity stripping” which involves a scheme to get the equity in your home pledged to a high risk separate loan, resulting in consumers losing their homes.