Is Mortgage Lending Too Predatory?

A Reuters article quotes U.S. Senator Christopher Dodd, who says mortgage lending practices are "out of balance", and that borrowers in the subprime market need to be protected.  Subprime mortgages are loans that are available to those with lower credit ratings, but usually at higher interest rates. There are an increasing number of lenders in this market; however, the lenders have not always done well, despite the pressure to put people into larger and larger loans.


Senator Dodd indicates that homeownership is under attack from greedy lending practices undertaken by the large number of subprime lenders.


His comments are not surprising, given the current statistics on foreclosure. According to RealtyTrac, a marketer of homes in forced sale, foreclosures were up a whopping 42 percent in 2006.

At the same time, we're seeing rates on standard mortgages go up and subprime lenders under a lot of pressure as a result, with some going out of business. So the predatory practices are not paying off.

If you have less than stellar credit, do not allow yourself to be talked into a larger mortgage so that you can "take that vacation" or "get that car". Get yourself informed by checking out our section on Bad Credit Mortgages. While the mortgage loan may often be a lower interest rate than a car loan, you are also hooking yourself to a debt that will take you 20 or 30 years to pay off.  While buying a home is a positive step, it only works if you can afford it. Get impartial, unbiased advice from a credit counselling agency or other financial professional if you have any questions about whether you can afford what you are buying or not.

Michael Chantrel


3 comments
Posted by william123 on May 1,2010 at 5:29 PM

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Posted by Michael on February 15,2007 at 7:41 PM
I'd have to disagree. The "free market" is not necessarily "benevolent". Those who have a vested interest (all puns intended) in the "selling" of loans are more likely to talk a prospective borrower into a larger loan, and not a smaller one. This doesn't necessarily do the borrower a favour. This process is a subtle pressure, and isn't going to be corrected by regulation; but let's not kid ourselves that there is PLENTY of disclosure in the mortgage industry, or even that all lenders always follow the rules perfectly. Perhaps lenders follow the letter of the law, but not necessarily the spirit of the law.
Posted by Ron Reeves on February 15,2007 at 5:31 PM
Congress should allow market forces to dictate rates.  There is PLENTY of disclosure in the mortgage industry and sufficient regulation to protect consumers.
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