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Abstract

This essay considers experimental evidence from behavioral economics can shed light on injured borrowers’ decisionmaking processes and the choice of legal redress. Specifically, I posit that predatory lenders exploit the behavioral principle of framing effects to manipulate homeowners’ otherwise strong aversion to losing their homes to foreclosure. Through clever marketing, distraction, and an often legal lack of transparency concerning the true risks involved, predatory lenders are able to divert the focus of homeowners from the fear of losing their homes to other fears, many of which are often conducive to less destructive solutions.

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