Industry welcomes internal subprime controls

NEWS

The statement has been issued in the wake of the subprime crisis – the effects of which mortgage lenders and some investment banks are still reeling from. It includes directives saying subprime ARM loans should be underwritten at fully indexed rates with fully amortising repayment schedules, and maintains that income verification is a crucial step in the lending process. It also encourages lenders to pursue prudent workout arrangements for subprime borrowers struggling with rate resets.

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