(1.) Inserting provisions into a loan contract that severely disadvantage the borrower, without the borrower’s knowledge, and sometimes despite oral assurances to the contrary. Prepayment penalties are perhaps the most frequently cited subject of such abuse.

(2) Adding provisions into the loan contract that disadvantage the borrower, and for which the lender has provided no quid pro quo. The mortgage process where borrowers don’t get to see the note until closing, at which point a pile of documents is thrown at them for signature facilitates contract knavery.

References

Jack, Guttentag. "Mortgage Glossary". 2008 <http://www.mtgprofessor.com/glossary.htm>.