The practice of sneaking a burdensome provision into the loan contract without the borrower's knowledge is known as what?

The practice of sneaking a burdensome provision into the loan contract without the borrower's knowledge is known as what?

• A. Equity Stripping
• B. Steering
• C. Contract Knavery
• D. Price Gouging

Answer: (C)

Hiding a burdensome term in a loan contract for the borrower to discover later is a deceitful contract practice. This sneaky maneuver—adding terms the borrower isn’t aware of—fits contract knavery, a term used to describe covert, dishonest manipulation of loan agreements. It directly undermines the borrower’s ability to understand and consent to all costs and obligations, which regulators require through full disclosure and transparent terms. Such concealment can lead to unexpected fees, higher payments, or onerous conditions, and it’s treated as fraudulent in mortgage lending. Other improper practices described by the other options involve different abuses: equity stripping targets reducing the borrower’s home equity through loans, steering pushes borrowers toward certain loan products, and price gouging charges excessively high prices in emergencies. None of these depict the act of secretly inserting a burdensome contract term.

Hiding a burdensome term in a loan contract for the borrower to discover later is a deceitful contract practice. This sneaky maneuver—adding terms the borrower isn’t aware of—fits contract knavery, a term used to describe covert, dishonest manipulation of loan agreements. It directly undermines the borrower’s ability to understand and consent to all costs and obligations, which regulators require through full disclosure and transparent terms. Such concealment can lead to unexpected fees, higher payments, or onerous conditions, and it’s treated as fraudulent in mortgage lending.

Other improper practices described by the other options involve different abuses: equity stripping targets reducing the borrower’s home equity through loans, steering pushes borrowers toward certain loan products, and price gouging charges excessively high prices in emergencies. None of these depict the act of secretly inserting a burdensome contract term.