Prof. Prentiss Cox ’90 Quoted in NPR Report on Deceptive Home Refinance Deals
Professor Prentiss Cox ’90 was quoted in an NPR investigations report about home refinancing deals that often leave homeowners in worse financial shape. As home prices nationwide have gone up dramatically since the start of the pandemic, the amount of equity that people have in their homes is rising, and many homeowners want to access that increased value. But for people with bad credit or low incomes, loans are often inaccessible. Prof. Cox said that although these deals are marketed as an alternative to a loan, people may not understand the difference. “One of the problems with these equity-based product lending is that the company will point to the contract and say, see this? We’re very clear. This isn’t a traditional loan, but homeowners are distressed. They need money. And to them, it’s often just seen as a loan.” He said that the complexity of these loans leaves homeowners vulnerable. “You’re selling the most complex, opaque, difficult-to-figure-out products to people who are the most distressed, credit-impaired and sometimes desperate. It’s just a horrible combination.”