2007-11-30 06:37:48 · 7 answers · asked by Debbie 4 in Business & Finance ➔ Renting & Real Estate
Subprime home loan are still alive and well, and in many markets mortgage company are starting new subprime loan.
Don't believe the media about this issue. Talk to a subprime mortgage broker. People with poor credit are still buying homes.
2007-11-30 08:21:18 · answer #1 · answered by Anonymous · 1⤊ 0⤋
Subprime loans never left. The term refers to loans for people who have poor credentials for borrowing money. The problem now is that lenders, specifically underwriters, are not as willing to take the financial risks they did just 2 years ago. Subprime borrowers are being turned away en masse. I doubt we will see such flexibility of lenders any time soon. This is primarily due to the fact that the Fed is no longer printing cheap money like they did in 02-03. This is actually a good thing. The underlying problem was political correctness run-amok. Minorities who had no business borrowing money were able to do so based on the Fair Housing Act strictures. White investors demanded loans based on these lax criteria. With all of the cheap money lying around everyone was getting these loans. White investors who were undercapitalized and minorities with poor credit. The money supply tightened, property values stabilized and ARM's came due. Now all of the white investors were overcommited as were minorities who couldn't afford the adjusted payments. BOOM! The "subprime" paper came due and it all fell down. It's actually a healthy thing. People who had no business owning properties they couldn't afford were pushed back to where they should have been in the first place. Sounds harsh, but you have to pay the piper.
2007-11-30 15:12:52 · answer #2 · answered by james 4 · 1⤊ 0⤋
Absolutely; but I think there will be more strict guidelines.
For instance; I wouldn't have been able to buy my first home without a subprime loan, because a divorce destroyed my credit BUT they were able to see my credit downfall coincided with my divorce and had been steller since so they gave me a break.
Pushing people into homes they can't afford, on the other hand, will definitely stop. Pressure from investors and a damaged economy will force restraints and a review of the guidelines.
2007-11-30 14:48:46 · answer #3 · answered by LifesAMystery 3 · 0⤊ 0⤋
Yes. I don't know any technical details that you might be looking for but this is the third time I've seen the real estate market kill itself from lax underwriting. It has risen from its past two disasters. I believe subprime home loans will come back simply because we are in a worldwide basis a debt driven society.
2007-11-30 14:48:41 · answer #4 · answered by Fred 4 · 0⤊ 0⤋
Sub prime loans have not disappeared, contrary to common belief. However, what HAS changed is that they are no longer offered anywhere near the 100% LTV ratio which was formerly used. These days, a 20-30% downpayment is required, so that the borrower stands to lose some SERIOUS money of his own if he/she defaults.
2007-11-30 17:02:32 · answer #5 · answered by acermill 7 · 1⤊ 0⤋
I am quite sure with the approprate deposit of 20% down, prime or subprime you can still get financed.
2007-11-30 14:45:30 · answer #6 · answered by ktlove 4 · 0⤊ 0⤋
yes they are already opening the doors to sub prime loans as customers are foreclosing on homes due to ARM rates increasing and no loans to help. NO CASH OUT but yes refinance and purchase are already opening up
2007-11-30 15:09:06 · answer #7 · answered by Fabio G 3 · 0⤊ 0⤋