Ace Your HUD Adventure 2025: Housing Counselor Certification Practice Exam Extravaganza!

Predatory lending refers to unethical practices that involve deceptive loan terms designed to take advantage of borrowers, especially those who may have limited understanding of financial products. This can include exorbitant interest rates, hidden fees, or misleading terms that trap borrowers in a cycle of debt. By targeting individuals who may not have access to traditional lending options, predatory lenders often impose burdensome conditions that can lead to foreclosure or other financial hardships.

Understanding that predatory lending is rooted in exploitation emphasizes the importance of recognizing the signs of such practices. It underscores the need for borrowers to be vigilant and informed about the terms of any loan they may consider, ensuring they do not fall victim to predatory behavior that could jeopardize their financial well-being. This definition aligns with the overall goals of housing counseling, which seeks to protect consumers and promote informed borrowing decisions.