With these bureaus, banks can find out not only whether a prospective borrower has already defaulted on a debt, but also how well and promptly he has serviced his liabilities.
Profitability was not a concern either for the borrower or, since their margins were guaranteed, for the banks.
Maybe not, though, if a borrower is sunk in debts and depreciated properties.
Or you may have a high debt-to-income ratio, anything that puts you sort of outside the realm of traditional prime lending, but you're not as risky as a subprime borrower.
By serving as a backup source of liquidity for borrowers, the Fed's commercial paper facility was aimed at reducing investor and borrower concerns about "rollover risk, " the risk that a borrower could not raise new funds to repay maturing commercial paper.
This is where she believes analyzing the socio-demographics of people at the bottom of the pyramid make a difference, revealing factors such as education, family size, and occupation as indicators of whether one makes a good borrower or not.
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Nearly a third of our states do not allow lenders the recourse provisions necessary to go after a borrower's personal assets in case of default on a residential mortgage.
When a borrower defaults there is not much question about who will eventually obtain title to the property.
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In short, investors are dealing with a new set of complex securities, based on loans to a new type of borrower, where the loan terms and conditions may not be clear and at a time when house prices are falling nationally for the first time in living memory.
For example, if a customer could potentially save 300 dollars a month while paying 250 dollars more into the principal by refinancing, why would this not be a benefit to both the lender and the borrower?
Like it or not, interest rates are a risk management tool for lenders and if a borrower has become delinquent on a loan they need to have a last line of defense.
The TIAA-CREF Municipal Bond Team examined the security for the bond as well as the economic and financial condition of the borrower and determined that Sam Rayburn was a stable credit that simply did not need to maintain a higher rating.
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