Lemelledo v. Beneficial Management Corp. of America

The opinion of the Court was delivered by

HANDLER, J.

“Loan packing” refers to a practice on the part of commercial lenders that involves increasing the principal amount of a loan by combining the loan with loan-related services, such as credit insurance, that the borrower does not want. In this case, a borrower secured a commitment from a commercial lender to provide a loan to defray the costs of college tuition for the borrower’s daughter. When the borrower received the loan proceeds, the principal amount to be repaid included unrequested and unexpected premiums for credit insurance.

The…