Question:

What includes the anti-predatory lending policy of banks?

Answer:

Banks establish anti-predatory lending policy on their own to protect themselves from liabilities and limit predatory lending. For the purpose, residential real estate loan collateral has to abide by any federal and local laws, including consumer protection regulations.

Common Anti-Predatory Lending Policy Terms

  • The borrower cannot be required to obtain a single premium life, disability, unemployment or other type of credit insurance;
  • Prepayment penalties extending for more than 5 years are not recommended;
  • With regard to prepayment penalties, lenders have to provide borrowers with benefit for accepting a prepayment penalty - such as fee or rate reduction;
  • Mortgage APR, points and fees cannot exceed the limits set by the Home Ownership and Equity Protection Act of 1994 (HOEPA) and the Federal Reserve Board Regulation Z.
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