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3 Signs of Predatory Lending is a new book which gives good information on what to look for as the signs of abusive lending practices.  Generally the difference between prime lending and subprime lending is that subprime loans cost more and charge higher interest rates.  Responsible subprime lenders provide access to credit to prospective buyers with poor credit scores.  However, lenders are considered predatory when their practices are not in the best interest of the borrowers.  Predatory lenders seek out borrowers who need cash due to medical issues, unemployment or other debt-related problems and borrowers who are not aware of their choices. 

Groups that are targeted are:  The Elderly.  They may have built up equity, but are cash poor because of medical or other debt problems.  They may not have the experience to comparison shop.  Minorities.  Studies have shown that blacks and Hispanics often pay higher interest no matter how high their incomes.  Immigrants.  They may lack language skills or not have prior homebuying experience.  They may also lack bank accounts and credit histories which would qualify them for traditional loans.  Individuals with low credit scores.  Sometimes borrowers fall behind in payments due to circumstances that do not repeat, medical bills or job layoff. 

These groups can be charged with unnecessary or nonexistent products and services.  They can also be given misleading or no information about loans.  The best advice is to read the details and terms of the loan carefully and be sure that the lender gives you, the borrower, a Good Faith Estimate of costs within three days of making a loan application.  If you see a lot of high costs you don't understand, ask for an explanation.  And, get another quote.  Ask your Realtor for the name of a lender you can trust.