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Home » Store » Taxable » Prepayment Penalties, Balloon Loans Raise Foreclosure Risk

Prepayment Penalties, Balloon Loans Raise Foreclosure Risk

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Subprime borrowers who have loans with prepayment penalties or balloon clauses are more likely than others to lose their homes in foreclosure, a new study by the University of North Carolina at Chapel Hill suggests. “We find that these predatory loan features lead to a significant increase in foreclosure risk, even after controlling for other risk factors,” researchers at UNC’s Center for Community Capitalism said in the 40-page report, released last week. …
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