Did you know that 6 out of 10 people who received subprime loans in 2006 could have qualified for a lower-cost mortgage, but didn't get the better deal because their mortgage broker earned a "kickback" for steering them to the higher-cost loan. And all this was completely legal.
The Federal Reserve Board is now deciding whether to fix this by preventing lenders from paying loan officers and brokers higher compensation for putting borrowers in loans with higher interest rates or into riskier loan products. The Fed's final decision will have enormous implications for all home buyers--but especially lower-income families, senior citizens, and people of color, who are most often steered into loans with inflated costs when they qualify for less expensive financing.
Published: December 4, 2009
Categories: Mortgage Lending