New York Times Op-Ed: Professor Mechele Dickerson Debates Home Refinancing
Room for Debate: Stricter Rules for Refinancing Your House? Tougher Standards Would Ensure Stability
Of the subprime mortgages that led to the 2008 financial crisis, only about a third were actually used to buy homes. Most of the borrowing was used to refinance existing mortgages and in many cases borrowers extracted the equity in cash, betting that their properties would appreciate. When that didn’t happen, many faced foreclosure.
Should there be tougher standards for refinancing a house? Should cash-out refinancing come with greater restrictions to protect home buyers? Professor Dickerson claims “encouraging borrowers to refinance their mortgage loan to pay off consumer debts or incur more debt is often not responsible.”
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