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Other than VA loans. I guess that is sort of a sub-prime loan. Maybe Freddie Mac and Sallie Mae as well. You need little or no down payment but as I understand it, there are a bunch of checks and serious credit checks for those.
But for the other subprime loans. It seems like everyone defaulted at the same time. Are their any people who brought way more than they should have or got credit that they that they probably shouldn't have qualified for but are still making payments on time and not hurting really bad?
Location: central, between Pepe's Tacos and Roberto's
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VA loans are not subprime. There are actually some pretty strict guidelines to adhere to. Sallie Mae is the student loan GSE, perhaps you meant Fannie Mae.
There are actually plenty of people out there that took out subprime loans and used them as intended, and subsequently refinanced into a conventional loan prior to their mortgage adjusting. Keep in mind that the subprime lenders did not just offer ARM's either, they did offer 30 yr fixed mortgages as well. I can't remember the exact numbers off of the top of my head, but I guarantee that less than half of the subprime loans originated in this country went into default.
Some investors used them and could flip fast before the rate went up, but when the market went doen that is when the trouble started to show and in our area will be bigger.
Location: central, between Pepe's Tacos and Roberto's
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I think it needs to be pointed out that as of November 2007, 11.2% of all subprime loans were in default. That means the 88.8% were not, and likely the majority of those loans were refinanced into conventional programs. Just a little perspective.
I think it needs to be pointed out that as of November 2007, 11.2% of all subprime loans were in default. That means the 88.8% were not, and likely the majority of those loans were refinanced into conventional programs. Just a little perspective.
I would like to add to this post something that has been bothering me a great deal. All I have been hearing about is how horrible and terrible the subprime industry is and that anyone that participated in it (Ex. Financial Banks, Brokers) are nothing but crooks.
I would like to let everyone know that our government encourage the formation of subprime markets in a effort to expand home ownership. Which I believe was the right thing to do and I base this opinion on multiple economic studies that have been done showing the positive affects home ownership has on communities. Home/Land owners rich or poor have much more pride and take greater care of the home they live in and the neighborhood they reside than do renters of equal income and education levels.
In addition, not just some people but the majority of those who took out subprime mortgages due to not qualifing for prime mortgages, were able to buy a home that they otherwise could not have. Made their payments and improved their credit rating and now have a wealth building asset that for so long had been unobtainable for people of low income.
I really hope that mistakes made by banking institutions (by developing loans that did not require verification of income, not completly underwritting each and every loan apprioprietly, and not documenting where each loan fell into mortgage backed securities), fraud, and poor advice given by a few bad eggs in the housing professions does not prevent low income families and people that made mistakes with credit in their youth from being able to take part in the benefits of homeownership.
We should not just trash the subprime market because of the pain we have experienced. Let us all remember that with a few corrections in how this market was utilized can give opportunities to the less privledged and improve our communities without the painful correction we are seeing today.
We have friends that bought a house in Scottsdale AZ for $ 425000 in 2004. They had an extremely low ARM with something like 1%. They sold two years later for approx. $650000. They re payed the loan, made over $200000 in profit (no taxes had to be paid) and never looked back. They were the lucky ones......
Last edited by haberstroh; 04-02-2008 at 01:32 PM..
Reason: typo
Location: central, between Pepe's Tacos and Roberto's
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Quote:
Originally Posted by Jamesww
I would like to add to this post something that has been bothering me a great deal. All I have been hearing about is how horrible and terrible the subprime industry is and that anyone that participated in it (Ex. Financial Banks, Brokers) are nothing but crooks.
I would like to let everyone know that our government encourage the formation of subprime markets in a effort to expand home ownership. Which I believe was the right thing to do and I base this opinion on multiple economic studies that have been done showing the positive affects home ownership has on communities. Home/Land owners rich or poor have much more pride and take greater care of the home they live in and the neighborhood they reside than do renters of equal income and education levels.
In addition, not just some people but the majority of those who took out subprime mortgages due to not qualifing for prime mortgages, were able to buy a home that they otherwise could not have. Made their payments and improved their credit rating and now have a wealth building asset that for so long had been unobtainable for people of low income.
I really hope that mistakes made by banking institutions (by developing loans that did not require verification of income, not completly underwritting each and every loan apprioprietly, and not documenting where each loan fell into mortgage backed securities), fraud, and poor advice given by a few bad eggs in the housing professions does not prevent low income families and people that made mistakes with credit in their youth from being able to take part in the benefits of homeownership.
We should not just trash the subprime market because of the pain we have experienced. Let us all remember that with a few corrections in how this market was utilized can give opportunities to the less privledged and improve our communities without the painful correction we are seeing today.
Very well said. People seem to forget that the government did in fact encourage much of the subprime and Alt-A lending as a way to spur the economy through home ownership post 9/11. Many people used these programs as they were intended to be used, and the majority of the brokers and lenders counseled their clients in the correct use of these programs.
I think it needs to be pointed out that as of November 2007, 11.2% of all subprime loans were in default. That means the 88.8% were not, and likely the majority of those loans were refinanced into conventional programs. Just a little perspective.
Most people can't refi. since the value of their home is lower than their mortgage!
I really hope that mistakes made by banking institutions (by developing loans that did not require verification of income, not completly underwritting each and every loan apprioprietly, and not documenting where each loan fell into mortgage backed securities), fraud, and poor advice given by a few bad eggs in the housing professions does not prevent low income families and people that made mistakes with credit in their youth from being able to take part in the benefits of homeownership.
We should not just trash the subprime market because of the pain we have experienced. Let us all remember that with a few corrections in how this market was utilized can give opportunities to the less privledged and improve our communities without the painful correction we are seeing today.
TOO LATE! The mortgage companies have already been so tight by too many knee jerk reactions that the good buyers w/ GREAT credit, wonderful job histories, plenty of cash flow, low debt, etc HAVE been hit. A few weeks ago (according to my mortgage broker) they came in saying that anyone w/ LESS than a FICO of 750 would be charged a whole 1% higher interest rate. They then lowered it to 720. THEN, if the home someone is trying to finance has seen so much as 2 foreclosures in the last several years the mortgage underwriters are LOWERING the appraisals. HURTING GOOD MARKETS that were not touched by runup's in values or subprime loans.
The pendulum has swung too far back the OTHER direction from the subprime loans and instead of HELPING the market they are hurting it even MORE.
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