Even presidential candidates can't avoid weighing in on the subprime lending debacle (also know as the people-who-never-should-have-ask-for-or-received-a-loan-in-the-first-place problem).
Don't get me wrong. Many people were taken advantage of by less-than-ethical mortgage brokers, but not everybody, and the foreclosure crisis isn't just the result of subprime lending. A lot of homeowners took every last penny of equity out their homes. Then prices dropped: Game over!
Boston Globe Real Estate Editor Andrew Caffrey posted information on the Globe's real estate blog August 8, 2007 from a Senator Hillary Clinton press release that outlines her plans "to crack down on unscrupulous lending and offer assistance to troubled homeowners facing foreclosure."
Of course, the plan provides for a $1 billion taxpayer bailout to assist homeowners facing foreclosure. The money would be provided to states, which would then use the money for state-sponsored programs.
The plan also calls for the elimination of home loans with pre-payment penalties. The release sites an interesting statistic. "Studies have shown that loans with prepayment penalties have a 52% greater risk of default than those without."
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