Final answer:
The Empower Plus Loan, akin to other securitized loans, may have drawbacks related to banks issuing loans with insufficient vetting, leading to a higher risk of default. There's an implication of higher initial affordability that may result in substantial financial burden over time. Borrowers can reassure lenders of their ability to repay by providing evidence of income, credit history, or a higher down payment.
Step-by-step explanation:
Some of the drawbacks of the Empower Plus Loan, which is representative of securitized loans like subprime mortgages, include a higher propensity for banks to issue loans without thorough vetting of the borrower's ability to repay. In the case of the Empower Plus Loan specifically, there aren't clear drawbacks listed, but we can infer potential disadvantages based on the general risks associated with securitized loans. Financial institutions may be more willing to make these risky loans, characterized by features such as low or zero down-payment, minimal verification of the borrower's income, and variable payment schedules that may start low but increase significantly over time. These loans can lead to increased default rates and financial instability for both the borrower and the lending institution. Borrowers who want to avoid the negative implications associated with these loans might strive to reassure banks of their creditworthiness by providing evidence of a stable income, a solid credit history, or offering a significant down payment. Such measures can demonstrate the borrower's commitment and ability to repay the loan, potentially leading banks to offer more favorable loan terms.