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Mitsubishi UFJ Financial Group Incorporated

Banks embracing a housing-bubble favorite: interest-only loans

Banks embracing a housing-bubble favorite: interest-only loans

Most of the risky mortgages that triggered the financial crisis have disappeared from the marketplace, and lenders will have even more reason to avoid them because of a new federal crackdown on loose lending. But one housing-bubble favorite — the interest-only loan — will remain a common offering to well-heeled home buyers, despite new rules from the Consumer Financial Protection Bureau. The rules, which took effect last week, exclude interest-only loans from "qualified mortgage" status, which protects lenders from liability over defaults. Bankers don't seem worried about affluent clients missing payments. With high-end home prices on the rise, they have...

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