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Properly, we think also default that is normal would meet or exceed the five % limit

Properly, we think also default that is normal would meet or exceed the five % limit

2nd, the Proposal would need lenders which have a default price surpassing five % to refund origination costs because of its whole profile for every single 12 months so it exceeded that limit. As being a practical matter, some standard is unavoidable regardless of how well underwritten that loan is. This particular fact along with the draconian consequences for surpassing the seeming low five default that is percent from the whole profile, lenders won’t be happy to assume this danger. Banks are uncertain that prudential regulators would regard this choice as a safe and lending that is sound because in times during the elevated credit losings, the lender could be expected to refund charges to customers and put further strain on the bank’s loan loss reserves.