Ever since the recent financial crisis, a great deal of attention is given to the banking and finance industries in the US and how they are administered. Earlier, US banks were being overly aggressive when granting loans in order to maximize their earnings and revenues.
It just took a small dip in the economy to provide the catalyst for an acceleration of homeowners becoming delinquent on their mortgages and the whole situation snowballed. It was over exposure to toxic loans which lead to a situation where much needed loans were not being granted and several found their selves without the required capital that they needed to operate In order to avoid the same thing from happening again in the future, the U.S. government has introduced sweeping changes to the banking and finance industries in order to protect consumers from exposure to debt in the future. The crisis in itself has altered the outlook of many people anyway and a growing number of US citizens are now questioning the significance of home ownership and credit in a whole.
In addition to tightening up regulations with regard to who gets a loan and who does not, further restrictions have even been placed on other credit sources like credit cards. The ethics of certain practices have been called into question and its no longer possible for credit card issuers to change interest rates after a purchase has been made and greater notice has to now be given before any changes are made. These changes are intended to give customers the chance to pull out of any transactions if they feel that they can't afford them.
Few regulations have been introduced to aid clients who have already suffered financial hardship due to the financial crisis. Home owners who have found that they can no longer afford to pay their mortgages, for instance, are able to apply to the home affordable modification program (HAMP).
This program permits debtors to apply to have their monthly payments adjusted to a more affordable level allowing them to keep their home and prevent acquiring a bad credit rating. Other examples include short sale regulations, in which home owners receive a degree of support and protection from the government should they find themselves unable to keep their home and their property is worth-less then the outstanding amount due to the lender.
Whilst few individuals argue that stricter regulations pertaining to who can and can't qualify for credit might affect many individuals and small businesses adversely, its still believed that the greater protection and regulation will be beneficial in the long run.
The financial calamity affected not only those who did have loans and lines of credit, but even many others who didn't because business went bust and employment rose. Though an individual might not be pleased at not being granted the loan that they applied for, it could well turn out to be in their best interests and had such regulations been in place beforehand then maybe the recession would never have occurred in the first place.
Author Resource:-
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