"It depends on the type of borrower and their background," says U Mya, a rice farmer and fisherman who started lending on the side eight years ago.
That is precisely the type of borrower who will benefit from the Mortgage Forgiveness Debt Relief Act, said Diane Gray, the director of counseling and education at Novadebt, a nonprofit debt counseling group based in Freehold, N.J.
With this type of loan, the borrower agrees to pay off the interest each month but makes no capital repayments.
With this type of home loan, the borrower agrees to pay off the interest each month but makes no capital repayments.
In short, investors are dealing with a new set of complex securities, based on loans to a new type of borrower, where the loan terms and conditions may not be clear and at a time when house prices are falling nationally for the first time in living memory.
The Office of Fair Trading's decision to refer the payday loan industry to the Competition Commission has put the spotlight firmly on this type of credit and its impact on borrowers.
The bonds, which were privately placed with investors and fully amortize over seven years, came with a rate of under 5 percent, well below the 8 to 12 percent that banks would normally charge borrowers for this type of expenditure, Mr. Podos said.
In practice, this type of loan is similar to a credit card: The borrower has a maximum allowable balance, and he/she can borrow up to the maximum amount.
These are the social costs of the vast increase in this type of credit: The financial system became more complex and borrowers were imperiled.
This type of loan often comes with higher fees because, as the borrower has taken out more money than the house is worth, the loan is not secured by collateral.
