Mario and Ivonne Luna got into trouble with their credit when a friend for whom they had cosigned on a loan ran up bills and left them for the Lunas to pay. As they contemplated borrowing money to pay off the debts, they got a call from Household Financial Services. "They said they had good news for me," says Mario, who cleans office buildings for a living. In June 2001 the Lunas borrowed against the equity on their home in Inglewood, just outside Los Angeles, purchased in 1996 for $107,000. Household added in $3,500 in credit insurance to the loan, with $11,000 in up-front fees known as "points," and when they balked at the latter, Luna says, the Household representative told them no one else would finance them and implied that the payments on the 10.8 percent loan would eventually drop. That hasn't happened.

"With interest and everything, I'll have to pay a half-million dollars on this house over thirty years," Luna sighs. He is trying to refinance with another bank and lower his $1,400 monthly payment.

Opponents call the practices that the Lunas endured "predatory lending," where unsuspecting borrowers are set upon by highly sophisticated hunters who prey on their desperation. The lending industry has other terms to describe their methods--flipping, stripping, packing, steering--just some of perhaps a dozen ways to get borrowers so mired in debt that they become permanent income streams for the lender.

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