There is an unfortunately common story amongst many Americans. Individuals took out loans on mortgages to buy a home, and after two years of a introductory interest rate, the monthly payments doubled. In that time, the market in the United States and around the world crashed, and the individual was left with exceedingly high rates and less income flowing in.
In these situations, assistance that was sought by service lenders, handlers of loans, and mortgage services was often not to be found. Quite often restructuring that left the individual bogged down even further was the final stage before foreclosure was required.
The situation happens time and again, and many point to a broken system. However, the Consumer Financial Protection Bureau has now sought out new rules that can take effect. The common-sense considerations behind it is that a mortgage ought only be sold to someone to can repay it. It is a simple concept that was somehow lost over the last decade.
Under the new proposed rules, lenders would determine that borrowers could actually pay back the loans. Mortgage lenders of course cannot be perfect, but removal of predatory loans is the key to making sure the most money can be made back and actually collected from borrowers.
The new laws are necessary to set safeguards, as those who can at least make strong efforts to pay back are more likely to keep money flowing through the system. By doing so across the board, the breakdown that occurred after the housing market crash will be less likely..
All of this must be done without red-tape growing to an absurd level, however. Practical rules and proper oversight is the key to the effective implementation. Sub-prime loans and sub-par services simply have to be removed as much as can be expected for such a large sector of the economy.
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