Mortgage Lending
In 2001, CRL estimated that predatory mortgage lending practices cost homeowners $9.1 billion each year, and the costs continue to mount. Nearly all abusive mortgage lending occurs in the subprime market -- home loans for people with impaired or limited credit histories.
Payday Loans
Research shows that predatory payday lending, also known as cash advance or deferred deposit, fails to help families solve financial crises. Instead of benefiting borrowers, payday loans trap them in high-cost debt. Payday lending disproportionately affects military families, African-American
families, and women.
Overdraft Loans
Overdraft loans (also called "bounce protection" plans) are offered by banks to low-income consumers. In exchange for covering account overdrafts, banks charge fees ranging from about $20 to $35 for each transaction. Because of a loophole in Federal Reserve rules, institutions do not have to reveal that they are charging as much as 1,000 percent interest on the loans.
Car Title Loans
Car title loans are marketed as small emergency loans, but they trap borrowers in a cycle of debt. A typical car title loan has a triple-digit annual interest rate, requires repayment within one month, and is made for much less than the value of the car.
Credit Card Abuses
Americans now owe close to $800 billion in credit card debt. For many low- and middle-income households, credit cards are the primary safety net available to weather job losses and deal with unexpected expenses.In borrowing to make ends meet, these families struggle with high interest rates, excessive penalty fees and capricious contracts terms.
Refund Anticipation Loans
Tax refund anticipation loans (RALs) are short-term cash advances against a customer's anticipated income tax refund. The loans come with high interest rates, ranging from about 40 percent to over 700 percent APR. Contrary to marketing claims, they do little to speed up the refund process.
Mandatory Arbitration
Mandatory arbitration means that any dispute that arises in connection with a loan must be resolved through a private legal system. Often, borrowers may not realize that arbitration eliminates the option of pursuing justice through a court of law. Moreover, people forced into arbitration may be burdened with excessive costs and receive unfair and biased results.
