- May 5, 2003
Shano said:I would suspect that greater competition in the home loan sector may have caused some relaxation in lending criteria.
Competition has meant that financial institutions have accepted greater risk in order to secure market share. Before the loosening of regulations governing mortgage lenders, one wouldn't really have found "low-documentation" lenders.
Interestingly enough, reports indicate that these low-doc lenders are vigorously persuing mortgagees in default, and selling houses from under them.
Accepting risk only goes so far before it starts costing money!