Final answer:
Borrowers make servicing complaints due to issues with loan management or terms, and to reassure banks of their creditworthiness, they can provide financial records, offer collateral, or get a co-signer. The subprime mortgage crisis heightened scrutiny and barriers to loans, making clear communication and loan terms understanding essential.
Step-by-step explanation:
Borrowers may make servicing complaints for various reasons, often stemming from issues with the terms or management of their loans. To reassure banks of their creditworthiness, individuals seeking a loan can take several steps. They can provide comprehensive financial records demonstrating stability and capacity to repay the loan, offer collateral to secure the loan, and potentially enlist a co-signer to share the repayment responsibility. This shows the bank that the risk of default is mitigated.
Moreover, during times of economic difficulty or when financial crises occur, such as the subprime mortgage crisis, the credibility and repayment capacity of borrowers may come under greater scrutiny. Banks, faced with imperfect information, may become more cautious, leading some borrowers to face higher barriers to securing loans, or stringent terms that could lead to servicing complaints if they become unfavorable or misunderstood by the borrowers.
Ensuring clear communication and understanding of loan terms is crucial for both parties to avoid disputes and complaints, which can be detrimental to both the borrower's financial stability and the bank's operational integrity.