Predatory lending typically occurs when financial institutions unfairly take advantage of consumers' financial needs by extending credit on terms that compensate them beyond the credit risk. Predatory loans come in many different forms, but always involve the consumer paying high interest rates and exorbitant fees. Some abusive lending practices include: • Equity stripping: The lender makes a loan based on the equity in the debtor's home. If the debtor cannot repay the loan, the house is foreclosed. • Bait and switch programs: The lender may promise one type of loan or interest rate, but forces the borrower to accept a different loan and a higher interest rate. • Loan Flipping: A lender refinances a loan with a new, long-term, high-cost loan. Each time the lender “flips” the existing loan, the borrower is required to pay points and miscellaneous fees. • Wrapping: A loan is made that contains fees for services that the borrower did not request or need. “Packing” most often consists of making the borrower believe that credit insurance must be taken out and financed as part of the loan in order to be eligible. the rate is short-term and the repayment amounts subsequently explode. • Payday loan (sometimes called cash advance): The borrower uses a post-dated check or electronic checking account information as collateral for a short-term loan. Borrowers only need personal identification, a checking account and income to qualify. Overdraft Loans (also called “bounce protection” plans): In exchange for covering account overdrafts, banks charge a bounced check fee per transaction. Some banks also charge daily fees until middle of paper......financial positions of the borrowers, their lack of knowledge as well as the superior bargaining power of the lender to obtain the borrowers. to accept these loans. Lenders should take major responsibility for these loans as they are aware of the ramifications of such transactions. Borrowers are also responsible, as they should not enter into contracts without fully understanding the consequences of such actions. In many cases, lenders do not provide information that could help the borrower make rational decisions. There are cases where the borrower doesn't care about increased penalties, he just wants to get his hands on the money and worry about the consequences later. Some borrowers live beyond their means, but once they get sucked into predatory lending, they begin a cycle of debt that they simply cannot escape from...