Washington Lenders Warned by DFI
August 16th, 2007 by 
Joseph Smith
The Department of Financial Institutions issued a warning to Washington mortgage lenders in the form of a guideline. These new guidelines are intended to reduce the risks of subprime loans. Mortgage lenders are advised to implement a stricter evaluation procedure in order to determine the borrowers’ paying capacity. The number of Washington foreclosures has soared in the past year, clearly indicating a worsening problem.
The department believes that at the end of the day, these lenders are the ones responsible when a borrower takes out loans that they could not afford to pay. Although there were lapses in judgments made by many mortgage lenders particularly during the last housing boom, the industry is accepting its accountability for the current housing condition and is acting to prevent it from worsening.
Across the nation, the real estate market is still being weighed down by the abundance of mortgage defaults. Many of these defaults were from the subprime industry – indicating that borrowers failed to understand what they were getting into. It is quite a relief for real estate experts that the Washington housing market remains to be strong. This obviously has insulated it from nationwide effects of rising foreclosure rates.
Still, it is evident that these lenders should have educated their borrowers in order to prevent situations like the one experienced by the country right now. These lenders should have discussed with borrowers the consequences of subprime loans since they carry higher-than-standard interest rates.
Although the new guideline issued by the department does not include any penalties for non-compliance, it can still penalize these mortgage lenders for misleading borrowers. As of June 2007, the number of Washington foreclosure filings has reached 10,988.
Real estate brokers like Foreclosure Deals can provide you with additional information on the latest news. In addition, buyers and sellers can utilize their foreclosure listings.
