The days of Household International and HSBC are gone. HSBC closed HSBC Finance just in time, but new proposed federal laws would have taken away their business anyway. Here are some of the proposed changes:
• barring lenders from penalizing subprime borrowers - those with spotty credit or low incomes - who pay their loans off early.
• forcing lenders to make sure that borrowers, especially subprime borrowers, set aside money to pay for taxes and insurance.
• restricting loans that do not require proof of a borrower’s income.
• examining lenders’ failure, in some cases, to consider a borrower’s ability to repay a home loan.
• improving financial disclosure so people better understand the terms and conditions of their mortgages and get this information when it is most useful.
• curtailing abuses in mortgage advertising.
While HSBC is not the only subprime lender one should remember that HSBC is a major player in the subprime game.
“We have an obligation to prevent fraud and abusive lending,” the Fed chairman, Ben Bernanke, said earlier this year. “At the same time, we must tread carefully so as not to suppress responsible lending or eliminate refinancing opportunities for subprime borrowers.’
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