Monday, March 24, 2014

It's back!

"Return Of The Subprime Mortgage

After the housing bubble burst borrowers with shaky credit were virtually locked out of the mortgage market. But once burned may not be enough for the financial industry as a few lenders are introducing another round of subprime loan offerings.
Conjuring up memories of the toxic low-down, adjustable-rate mortgages that backed so many homeowners into the foreclosure corner, subprime mortgage are once again being offered to borrowers who pose a higher credit risk, typically with credit scores below 640.
This time the loans are much more costly. When once subprime loans offered cheap teaser rates and little or no down payments, they now come with interest rates as high as 8% to 10% with down payments of as much as 25%-35%.
Most of these borrowers have nowhere else to turn. Fannie Mae and Freddie Mac, which back 80% of all U.S. home loans, won't back loans issued to subprime borrowers."


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