Dodgy home loan companies face jail time

The government has introduced plans that will threaten irresponsible home loan brokers and lenders with jail time for failing to check whether a borrower can afford the loan repayments.

As part of a shakeup of the credit card, home loan and personal loan industry, Rudd and the gang have also announced that they will be handing out fines of $220,000 for any individual hawking home loans irresponsibly, while corporations who do so could be slapped with a fine of $1.1 million.

While the announcement was widely welcomed by consumer groups, the opposition law spokesman Chris Pearce mused: "We hope it doesn’t needlessly tie up credit when credit is sorely needed at this difficult time."

The announcement comes as fears grow over the prospect of rising home loan defaults as the weak economic conditions persist.

The Daily Telegraph has revealed that that New South Wales currently has the highest number of home loan default hotspots in the country.

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