Fraudulent Lending

Creditors are institutions that lend money, such as banks, credit unions, mortgage lenders, and credit card companies. When creditors lend, there are rules they have to follow, such as the Truth in Lending Act (TILA), which requires, among other things, written disclosures about credit terms. However, sometimes lending institutions fail to adequately explain fees, or they seem to add on fees that were unexpected. When this happens, there could be a case for fraudulent lending.

Some examples of possible fraudulent lending include:

• The lender charges a fee to obtain a loan, then doesn’t provide the loan once the fee is paid

• Deceiving someone into getting a loan that they don’t want or need

• Advertising promises for loan approval regardless of credit history or credit rating

• Excessively high interest rates, especially targeting a particular demographic group

• The charging of upfront fees to save a home from foreclosure

• Hidden fees in a loan agreement

Fraudulent lending can happen to groups that seem to be financially disadvantaged (i.e., seniors). However, it can just as easily happen to a corporation that borrows money from a seemingly legitimate lender to finance a construction project.