Whats your opinion on the Subprime meltdown?

Question

As you know, its getting tougher and tougher to get a subprime loan. Requirments are going up, banks are closing their doors, etc. What do you think will happen to all the clients who want to buy a home, but have low credit scored and need 100% finance? What are creative ways/loopholes around these clients getting into a home.

Answer 1

I think it is a natural thing, and that it is an adjustment the market will have to make. In past years, subprime lenders have opened the guidelines up to include all people in the boom. Now that the housing market is slowing, there is less equity in homes, and banks do not come out is well in foreclosure. The only way I see for people with lower credit who need high LTV financing to get in to a home easily is to buy a cheaper house so the ratios come out better. It is so much more complicated, but this is my basic opinion.

Answer 2

The subprime market has no one to blame but themselves. It's unfortunate that that subprime borrowers can't get a loan, but an individual who manages to get themselves into that type of situation more than likely put themselves there. & then they default on the loan, which is why a regular lender didn't want to loan to them in the first place... the borrower was in over their head at the get go. I know that there are situations that are out of a persons control & they didn't deserve it. But the fact remains that there is a reason why a conventional lender won't give them a loan. & it's because they are highly likely to not have the resources available & end up defaulting.

I would suggest that a borrower who is only qualified for a subprime loan work on getting their credit score up. In the long run it will only help them. Not to mention cost them less. Which if a subprime borrower takes the time to calculate out will give them more money every month in their pocket from lower interest & less fees.

Why a person would want to find a loophole is beyond me. Sure it will get them in there, but once there will the person be able to stay there? Or will being there cause them more grief in the long run from increases debt & possible bankruptcy?

Answer 3

I think its these very clients that are responsible for the crackdown, as well as the market downturn becuase they're losing their houses, which are then sold by banks for udner market value, driving down the costs.

People with poor credit shouldn't buy a house utnil they fix their issues. I waited a year and cleared up all mine and got a prime loan instead of a subprime one.

Answer 4

This is just a natural swing in the market. I have been in sub-prime finance for over 7-years now and have seen this before. The lenders let their guidelines slip because they are doing really good but want to do better and they do for awhile. Then the real rats start to not pay their bills like they always do and the lenders start to lose money so they tighten up their guidelines. Happens every few years like clockwork.

Sub-prime is here to stay. It will just require more money down and better job time and incomes for awhile.

Answer 5

If someone "needs" 100% financing, then they are NOT in a position to buy! I look forward to seeing some of these bottom-feeders going belly-up! "Subprime" is code for "PREYING ON THE POOR"! These are NOT your clients, they are your VICTIMS!

Answer 6

people will need to be more careful with credit!!!!

credit scores will need to come up and then there will be more prime borrowers

it's just recklessness that creates MOST sub-prime borroweres

also there are other sources of funds

family / private loans

and truthfully a sub-prime lender will still lend as long as you meet a lot of conditions during the loan process

like lots of letters of explanation and bank statements

so sub-prime lending is here to stay just stricter sub-prime lending