The Miami Herald Consumer Watch Column.
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-Subprime lending — loans made to customers with poor credit — has been in the headlines lately, with Bank of America becoming the latest major institution to pull out of the industry. But for consumers, subprime needn’t be a dirty word, according to Bob Tedcastle, financial administrator with the Florida Department of Banking and Finance, which regulates the state’s mortgage firms. These loans have higher interest rates and more restrictive provisions than conventional mortgages because lenders are taking on more risk. Even so, “sometimes, offering subprime loans gives people the ability to purchase a home where they might not be able to otherwise.” Tedcastle said. Subprime loans become predatory if lenders charge excessive interest rates and closing costs or tack on pricey insurance premiums or points that deplete the loan’s equity, said Elizabeth Renuart,… |