What is 'Mortgage Suitability'
A standard to which mortgage lenders can adhere when directing consumers to a mortgage loan. Under such a standard, mortgage lenders would be held liable for steering consumers toward an unsuitable mortgage. While no federal suitability standard currently exists, lenders are vehemently opposed to such a standard because they argue that they cannot possibly collect and know all of the information required to make a decision for a consumer.
BREAKING DOWN 'Mortgage Suitability'
Mortgage financial literacy is an alternative solution to setting suitability standards. The choice of a mortgage is a standard risk versus reward scenario, which is prevalent in most financial decisions. Informed and educated consumers can make effective mortgage decisions in the context of risk versus reward.