Lack Of Mandatory Escrows Contribute To Subprime Lending Troubles

Federal regulators believe that a key contributing factor with so many subprime mortgage loans going bad is that many of these loans came without mandatory escrow accounts, which are accounts that the borrower pay into every month and out of which the home's real estate taxes and property insurance premiums are paid from. These loans are contrasted with conventional mortgage loans made to those with excellent credit, which typically require these escrow accounts.

One consumer advocate says "It's an upside-down world ... The people you'd think need an escrow the most are not required to have them, and the people who need them the least are forced to use them."

To read more, see syndicated columnist Kenneth Harney's article, Feds, Consumer Advocates Focus on Lack of Escrows in Subprime Mortgages, reported online at Realty Times.
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