In the lending business, a debt contract is established for those who receive financing (borrowers) and those who provide it (lenders), and the borrower promises to repay the principal plus the required interest in a stipulated amount of time.
What seemed truly radical, though, was our commitment to setting the rate collaboratively, with face-to-face quarterly pricing meetings involving investors, borrowers and RSF staff all playing a significant role in determining the interest rates investors receive and borrowers pay, as well as RSF's share of the revenue.
Sharply cutting interest rates vastly increases banks' profits by widening the spread between what they pay to depositors and what they receive from borrowers.
Lenders and their representatives, however, don't like to modify loans through interest rate cuts or principal reductions because, of course, it reduces the income they receive from borrowers.
Industry critics have long charged that lenders or brokers sometimes inflate the estimated costs of third-party fees and pocket the difference after they receive the borrower's check on settlement day, or that they may bundle costs so consumers have little way of knowing what has been inflated.
The request follows a report last fall from Mr. Chopra about complaints the agency had received from borrowers of private student loans.
Complaints received from borrowers include difficulty in getting accurate information from servicers about how much is owed, confusion over fees, delays in having payments credited and difficulty in getting help when borrowers run into financial trouble.
Mr. Willey said banks were likely to clamp down on lending after receiving their borrowers' annual financial statements, which are typically due 90 or 120 days after the year ends.
Younger borrowers receive less money from reverse mortgages than do older borrowers, based on actuarial life expectancy tables, and Mrs. Knakal found herself running low on money sooner than expected.
Even when borrowers receive modifications, their loans can still be unaffordable or problematic.
