Comparative Law Researches

Comparative Law Researches

The Concept and Legal Implications of Predatory Lending and Strategies to Combat It in Iranian and U.S. Law

Document Type : مقالات علمی پژوهشی

Author
mohammad hosein vakili moghadam
Assistant Professor in Private Law, Faculty of Theology and Law, Hazrat-e- Masoumeh University, Qom, Iran
10.48311/clr.2026.101631.0
Abstract
Predatory lending refers to lending practices in which the lender, by exploiting the borrower’s lack of knowledge, financial distress, or economic vulnerability, imposes unfair, inequitable, or deceptive terms upon the borrower. This phenomenon, which is most commonly observed in the realm of consumer and mortgage loans, gives rise to a range of legal and social consequences, including violations of the principle of contractual fairness, disruption of public economic order, and the imposition of severe financial burdens on borrowers.
Using a descriptive-analytical methodology, this article first elucidates the concept and defining characteristics of predatory lending, and then examines its legal implications within the legal frameworks of Iran and the United States of America. The aim of this study is to lay the groundwork for strengthening legal protection for financial consumers and promoting contractual justice in monetary transactions; objectives that can be achieved through the recognition of the doctrine of good faith in contracts as a binding legal obligation.
Keywords
Good Faith
Abuse of Rights
Malicious Loan
Unfair Terms
Predatory Lending
Subjects
3-8) منابع انگلیسی
A) Books
1.    Garner, Bryan (2011). Black’s Law Dictionary, West Published, 9th Edition.
 
B) Articles
2.    Agarwal, Sumit (2013). “Predatory Lending and the Subprime Crisis”, Fisher college of Business, Working paper series, No. WP 2012-8.
3.    Ament, Hirsh (2009). “Predatory Lending: What Will Stop It”, Journal of Business & Technology Law, 4(2), pp. 371- 394.
4.    Austin, Regina (2004). “Of Predatory Lending and the Democratization of Credit: Preserving the Social Safety Net of Informality in Small-Loan Transactions”, American University Law Review, 53(6), pp. 1211-1258.
5.    Bagheri, Ali; Akbarineh, Parvin (2024). “Good Faith As The Common Core Of Pre-Contractual Information Disclosure In The Iranian Law And The Principles Of European Contract Law”, Revista do Curso de Direito do UNIFOR, 15(1), pp. 246-260.
6.    Bond, Philip (2008). “Predatory Mortgage Lending”, Federal Reserve Bank of Philadelphia, Research Department Working Paper, No. 08-24.
7.    Carr, James; Kolluri, Lopa (2010). “Predatory Lending: An Overview”, Fannie Mae Foundation Workpaper, No. 12/10.
8.    Combs, Lincoln (2006). “Banking Law and Regulation: Predatory Lending in Arizona”, Arizona State Law Journal, 38(2), pp. 617- 632.
9.    Donald, Morgan (2007). “Defining and Detecting Predatory Lending”, Econ Store & Federal Reserve Bank of New York Staff Report, No. 273.
10. Drury, Lbyd (2009). “Predatory Lending and Its Impact on Consumer Credit”, Loyola Journal of Public Interest Law,10, pp. 137-148.
11. Engel, Kathleen; McCoy, Patricia (2002). “A Tale of Three Markets: The Law and Economics of Predatory Lending”, Texas Law Review, 80(6), pp. 1255-1367.
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13. Fisher, Dustin (2008). “Selling the Payments: Predatory Lending Goes Primetime”, John Marshall Law Review, 41(2), pp. 587-610.
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15. Goldstein, Deborah; Brinegar, Matthew (2010). “Policy and Litigation Barriers to Fighting Predatory Lending”, Northeastern University Law Journal, 2(1), pp. 167-194.
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18. Khan, Mihammad; Bae, Jung-Han; Choi, Seok – Beom; Han, Nag-Hyeon (2019). “Good Faith Principles In Islamic Contract Law: A Comparative Study With Western Contract Law”, Journal Of International Trade & Commerce, 15(6), pp. 143-159.
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20. Lewis, Michelle (2003). “Perspectives on Predatory Lending: the Philadelphia Experience”, Journal of Affordable Housing and Community Development Law, 12(4), pp. 491-520.
21. McCoy, Patricia (2005). “A Behavioral Analysis of Predatory Lending”, Arkon Law Review, 38(4), pp. 725-740.
22. Mehkeri, Zainab (2014). “Predatory Lending: What's Race Got to do With It”, Public Interest Law Reporter, 20(1), pp. 44-51.
23. Mullen, Daniel (2014). “To Catch a Predatory Lender”, Temple International & comparative Law Journal, 28(1), pp. 83-114.
24. Sounders, Morgot (2018). “The Increase Predatory Lending Appropriate Remedial Actions”, North Carolina Banking Institute, 6, pp. 111-146.
25. Stark, Debra (2005). “Unmasking the Predatory Loan in Sheep's Clothing: A Legislative Proposal”, Harvard Blackletter Law Journal, 21, pp. 129-162.
26. Stojkovic, Marko (2016). “The Threat of Predatory Lending”, Loyola Public Interest Law Review, 22(1), pp. 40-54.
27. Stojkovic, Marko (2017). “The Dodd-Frank Solution to Predatory Lending”, Public International Law Report, 22(2), pp. 106-128.
 
C) Thesis
28. Ahmed, Nadeem Mohiuddin (2020). “Aggressive Sales Culture in Banking Practice”, Western Sydney University, School of Business, Thesis submitted for the partial fulfilment of the requirementsfor the degree of Master of Business Law.
 
[In Persian]:
A) Books
29. Abdipour, Ebrahim (1997). A Comparative Study of the Concept and Effects of Necessity (Idtirar) in Civil Law, 1st ed., Qom: Islamic Propaganda Office Publications.
30. Bahrami, Hamid (1991). Abuse of Right: A Comparative Study in Islamic Law and Other Legal Systems, 2nd ed., Tehran: Ettela’at Publications.
31. Jafari Langaroodi, Mohammad Jafar (1999). Law of Obligations, 1st ed., Tehran: Ganj-e-Danesh Publications.
32. Jafari Langaroodi, Mohammad Jafar (2003). Dictionary of Elementology, 1st ed., Tehran: Ganj-e-Danesh Publications.
33. Jafari Langaroodi, Mohammad Jafar (2007). Al-Fariq, Vol. 2, 1st ed., Tehran: Ganj-e-Danesh Publications.
34. Jafari Langaroodi, Mohammad Jafar (2009). Waseet in Legal Terminology, 2nd ed., Tehran: Ganj-e-Danesh Publications.
35. Katouzian, Nasser (2008). General Rules of Contracts, Vol. 3, 5th ed., Tehran: Sherkat-e Sahami-ye Enteshar.
 
B) Articles
36. Alizadeh, Mehdi (2005). “Foundations of the Principle of Good Faith and Fair Dealing in Contracts,” Theology and Law, No. 15 & 16, pp. 95-126.
37. Bafahm, Mohammad; Fahimi, Azizollah; Hasanzadeh, Mehdi (2023). “The Enforcement Mechanism of the Prohibition of Abuse of Right in Civil Procedure of Iran and France,” Comparative Law Research, 27(3), pp. 1-48.
38. Hajipour, Morteza (2013). “Obligatory Good Faith in Imami Jurisprudence,” Islamic Jurisprudence and Law, 4(7), pp. 31-68.
39. Jafari, Ali; Heidari, Alimorad (2017). “Feasibility Study of Deriving the Jurisprudential Principle of Good Faith,” Jurisprudence and Principles of Islamic Law, 50(2), pp. 329-344.
40. Katouzian, Nasser; Abbaszadeh, Mohammad Hadi (2013). “Good Faith in Iranian Law,” Journal of Law (Legal Journal), 43(3), pp. 167-186.
41. Khazaei, Seyed Ali; Allahmoradi, Hananeh (2023). “A Critique of the Viewpoint on Accepting the Principle of Good Faith in Contract Formation in Iranian Law,” Studies in Islamic Jurisprudence and Law, 15(30), pp. 57-80.
42. Naghibi, Abolghasem; Taghizadeh, Ebrahim; Bagheri, Abbas (2014). “The Status of Good Faith in Imami Jurisprudence,” Islamic Law, 15(1), pp. 33-57.
43. Salehi, Esmail; Khandani, Pedram; Pahlavanzadeh, Abbas (2023). “Principles of Good Faith and Fair Dealing in Contracts in Islamic Jurisprudence and Iranian Law with a Comparative Study of European Union Law,” Studies in Economic Jurisprudence, 15(5), pp. 2-17.
44. Sheikh-ol-Eslam Nouri, Elham; Parsapour, Mohammad Bagher; Mohammadi, Pejman (2023). “Conditions for Prohibiting Discriminatory Transactions (A Comparative Study of the Law of the United States, the European Union, and Iran),” Comparative Law Research, 27(1), pp. 23-54.
45. Simayie Sarraf, Hassan (2014). “A Comparative Study of Good Faith in Jurisprudence, Foreign Law, and International Instruments,” Teachings of Civil Jurisprudence, 10, pp. 51-72.
46. Vakili Moghadam, Mohammad Hosein (2021). “A Study of the Blue Pencil Rule in Common Law and Its Comparison with Islamic Jurisprudence and Iranian Law,” Comparative Research of Islamic and Western Law, 8(1), pp. 231-258.
 
[In Arabic]:
 A) Books
47. Al-Hilli, Hasan ibn Yusuf (2002). Tadhkirat al-Fuqahā’, Vol. 13, 1st ed., Qom: Al al-Bayt Institute for the Revival of Heritage.
48. Rawandi, Qutb al-Din (1984). Fiqh al-Qur’ān, Vol. 1, 2nd ed., Qom: Maktab Ayatollah Mar‘ashi Najafi.
49. Al-Saduq, Muhammad ibn Ali (1992). Man Lā Yaḥḍuruhu al-Faqīh, Vol. 2, 2nd ed., Qom: Publications Center of the Islamic Propagation Office.
50. Al-Tusi, Abu Ja‘far (1986). Al-Khilāf, Vol. 3, 1st ed., Qom: Publications Center of the Islamic Propagation Office.
51. Al-Kulayni, Abu Ja‘far (1986). Al-Kāfī, Vol. 4, 4th ed., Tehran: Dār al-Kutub al-Islāmiyyah.
 
B) Articles
52. Abdullah Ahmad, Khadijah (2021). “The Principle of Good Faith in Transactions: A Comparative Study,” Majallat al-Sharī‘ah wa al-Qānūn (Journal of Sharia and Law), 38, pp. 417–497.
53. Huda, Ibn Ayyub (2013). “The Principle of Good Faith in Contracts”, Larbi Ben M’hidi University, People’s Democratic Republic of Algeria, Master’s thesis (Contract Law specialization).