The subprime debacle has been in the headlines lately. Unfortunately for lenders, being in the headlines is a bad thing. The result is usually regulation and stricter guidelines that make business more difficult. Their mission now is to clean up the industry themselves before the regulators step in. Citigroup and Bank of America are among the big lenders trying to find a way to help subprime borrowers. However, there's a dilemma: it's hard to tell what motivated a given borrower to get overextended. Was it need or greed? Did they get ripped off by a shady lender with a complicated product, or did they take a risk that they knew might catch up with them? A recent NPR story explains the situation in a bit more depth. Listen to the story at NPR.org.
Further reading:
Yes, many borrowers bought into the hype and thought money was raining down from the sky when refinancing their loans. There were other borrowers who fell for the slick fast talk of many unfair brokers.