(This is Part 1 of a six-part series. Read Part 2, Part 3, Part 4, Part 5 and Part 6.) Consumer groups believe that lenders should not allow borrowers to take mortgages that aren't suitable for them. Lenders who do allow it should be held liable. The case for suitability looks both simple and plausible, and it seems to be making headway in Washington, D.C. A federal suitability rule has worked in the securities industry, or so goes the argument, so why wouldn't it work with home mortgages? One major difference between the two markets is that the securities market has only one problem to which suitability is directed: preventing unsophisticated investors of limited means from being sold securities that are too risky for them. The home mortgage market, in contrast, has multiple proble...
Get Inman via Facebook Messenger
Our top headlines delivered once a day.