Dollars and Sense: Predatory Lending Quiz
Unfortunately, predatory lending is big business. How much do you know about avoiding lenders who want you to promise more than you can pay? Take our Predatory Lending Quiz and find out.
Who do predatory lenders target primarily?
- Large corporations
- Minorities, the elderly, non-native English speakers and people with bad credit
- Small business owners
In a predatory lending collusion, what is a kickback?
- A payment made from a mortgage lender to a mortgage broker
- A small "bonus" payment used to convince the homebuyer to sign the loan
- A bribe used to convince local governments to look the other way
What is the bait-and-switch tactic?
- The lender offers a mortgage that has blank sections in it
- A lender offers two different mortgage plans, but both plans are really the same
- Two lenders work together to trick the homebuyer into signing an expensive mortgage
What does it mean to flip a loan?
- Using a variable interest rate to hike payments from one year to the next
- A lender convinces a homeowner to refinance a mortgage unnecessarily
- Changing the conditions on a loan just before the homebuyer gets a chance to sign
According to the Center for Responsible Lending, what percentage of subprime loans carry a prepayment penalty?
- 60 percent
- 80 percent
- 95 percent
What is a common tactic in loan fraud?
- Verbally quoting one interest rate but writing a second rate into the actual contract
- Encouraging the borrower to misrepresent his or her salary in order to secure a larger loan
- All of the above
What does ARM stand for?
- Adjustable rate mortgage
- Affixed rate mortgage
- Altered rate mortgage
What is a 2/28 or 3/27 loan?
- A loan with reliable, fixed interest rates
- A loan made in February or March
- an ARM loan
If an ARM rate increases by four or five percentage points, how much will the monthly mortgage payment increase?
- By 4 or 5 percent
- By 10 to 22 percent
- By 29 to 50 percent
How much money will be lost in home equity due to nearby foreclosures according to the Center for Responsible Lending?
- $164 billion
- $233 billion
- $327 billion