Mortgage Professionals’ Perspectives on Abusive and Predatory Lending


Delgadillo, L. Erickson, L.V. & Piercy K.W. (2008). Disentangling the differences between abusive and predatory lending: Professionals’ perspectives. The Journal of Consumer Affairs 42 (3), 313-334.

Brief Description: This study describes how mortgage professionals differentiate abusive from predatory lending. The results indicate that some users of this term do not always adhere to a strict definition of predatory lending, but rather use it as a term for any general mortgage abuse and mortgage fraud. Existing laws at the federal and state level curtail abusive lending and promote fairness in the market place, and they are highly enforced among depository financial institutions. However, unregulated non-financial institutions, mortgage brokers, and originators are still a primary source of predatory lending. Specific recommendations for consumer protection are proposed.

Implications: The main imperative is the need for clearly and legally defining predatory lending, since an uncertainty of the term makes consumer protection more difficult. In addition, consumer education is paramount, because informed consumers are both less likely to fall prey to abusive lending tactics and more likely to make informed choices.