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| Author: | Bond, P. Musto, D. K. Yilmaz, B. |
| Title: | Predatory mortgage lending |
| Journal: | Journal of Financial Economics
2009 : DEC, VOL 94:3, p. 412-427 |
| Index terms: | mortgages loans borrowing information |
| Language: | eng |
| Abstract: | Predator loans are loans that borrowers should not accept due to conditions that might harm them. This article uses a model of consumer credit to study in which kind of circumstances this predatory lending can appear. The results show that collateralized loans, inefficient refinancing of subprime loans, lending without due regard to ability to pay, prepayment penalties, balloon payments and uninformed borrowers are all characteristics that are related to the phenomenon of predatory lending. Furthermore, competition among lenders seems to reduce predatory lending. |
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