Bank of America alters loan practices
Bank of America said yesterday it would stop peddling risky mortgages, including subprime and other non-traditional loans, after it completes the $4 billion purchase of Countrywide Financial Corp.
In our sister paper, the Chicago Tribune, BofA's global consumer credit executive Bruce Hammonds said, "We recognize this tightening restricts the availability of credit to some borrowers, but this will help ensure that those who get loans can afford to repay them."
Among other things, BofA announced in public testimony on its proposed purchase of Countrywide that the combined company will halt making option adjustable-rate mortgages, drastically cut back on low-documentation loans and limit prepayment penalties.
It won't solve the subprime mortgage mess we've got on our hands right now, but it's a step in the right direction. This goes back to my Sunday column where I said we're all for people getting credit limits they can afford on their credit cards... or at least curbing the ease of credit for people who can't afford it in the first place.
Categories: Consumer protection, Debt, Loans
Comments
Wait, so responsible and non-predatory loans would actually keep banks out of financial catastrophe? That's just crazy enough to work!
DD: Be responsible AND fair? That is crazy talk, indeed.
Posted by: Evan | April 23, 2008 3:13 PM
The payday loan industry has been the main target for corrupt politicians from all sides. They are searching an increase in voter support disregarding what’s best for their citizens. Several states including Georgia, North Carolina, and Oregon has successfully wiped out the payday loan industry. For example, in Georgia, foreclosures, bankruptcy filing and bounced checks has raise tremendously after the cash advance product was done away with. Despite this unfortunate fact, several governors continue to try and follow this suit. Presidential hopeful, Barack Obama and many other politicians with high positions have joined the march to wipe the industry completely off the map. If this action takes place, the true possibilities of increased unemployment rates, debts and foreclosure will also take its place.
DD: We're all for responsible lending. But all too often here, we hear about customers who are charged outrageously high interest rates for pay day loan and we can't support taking advantage of people.
Posted by: Payday Loan Advocate | October 7, 2008 4:42 AM