Predatory Lending and Unfair Practices
Triggered by the collapse of housing prices and a surge in defaults and delinquencies, a spate of recent cases include an array of allegations concerning potential predatory lending behavior. Complaints allege that the loan-generating process itself was fraudulent or that certain types of loans or loan characteristics were unsuitable for the borrower. Other suits allege discriminatory practices, claiming disparate treatment of groups based on race or other demographic characteristics.
In addressing these types of allegations, which involve claims for either injunctive relief or monetary damages, NERA experts perform rigorous statistical investigations of alleged practices. We use econometric analysis to understand the causes of differences in loan prices and terms, including the credit history, education, and income of the borrower, as well as the borrower’s preference for risk (or discount rate). Our experts also consider the competitiveness of the market in which the loan was arranged and other macroeconomic factors. Statistical analysis is essential to distinguish behavior that is predatory from that which is explainable by other factors and so does not provide evidence of fraud or discrimination.
NERA experts have extensive experience presenting the results of complex statistical analyses in a manner that can be easily understood by clients, judges, and juries.
