 
     |
| Foreclosures at record as household wealth falls (Page 1/19) |
|
craigsfiero2007
|
MAR 06, 10:25 PM
|
|
|
|
maryjane
|
MAR 06, 10:35 PM
|
|
subprime loans..............? ? ? ?
Explain that term please-in layman's terms--and why anyone would elect to go that route.
|
|
|
|
84fiero123
|
MAR 06, 10:38 PM
|
|
ARM’s
Adjustable
Rate
Mortgages
People with bad credit can get those loans easier with a lower down payment.
You or I might need 20K down for the same loan they would need 50K for down.------------------
Technology is great when it works,
and one big pain in the ass when it doesn't.
Detroit iron rules all the rest are just toys.
|
|
|
|
maryjane
|
MAR 06, 10:42 PM
|
|
| quote | Originally posted by 84fiero123:
ARM’s
Adjustable
Rate
Mortgages
People with bad credit can get those loans easier with a lower down payment.
You or I might need 20K down for the same loan they would need 50K for down.
|
|
That's a contradiction. Maybe explain to me more layman than that?
Why is it called sub-prime?
|
|
|
|
84fiero123
|
MAR 06, 10:47 PM
|
|
Prime rate mortgage is the better rates (lower), fixed.
Arms are adjustable rates, you may get it at 3% at first but then it goes up after a year or 2.
that’s what is killing the housing market right now.
They say it could last a couple of years and you could loose all equity in your home, if you had any to begin with.
not really sure why they call it Subprime------------------
Technology is great when it works,
and one big pain in the ass when it doesn't.
Detroit iron rules all the rest are just toys.
|
|
|
|
OKflyboy
|
MAR 06, 10:52 PM
|
|
| quote | Originally posted by 84fiero123:
Prime rate mortgage is the better rates (lower), fixed.
Arms are adjustable rates, you may get it at 3% at first but then it goes up after a year or 2.
that’s what is killing the housing market right now.
They say it could last a couple of years and you could loose all equity in your home, if you had any to begin with.
not really sure why they call it Subprime
|
|
The banks are giving loans to borrowers that are below the "prime" credit rating. Hence they are "Subprime" lenders and borrowers.
or as Google puts it:
Definitions of Subprime on the Web:
* Credit with higher risk characteristics, such as bankruptcy or collection accounts.
www.closenow.com/glossarys.html
* A term referring to borrowers with a less-than-perfect credit history, also called B&C credit.
www.guarantybanking.com/glossary_l.aspx
* Industry term used to describe credit and loan products that have less than stringent lending and underwriting terms and conditions. As a result of the higher risk, subprime products charge a higher rate of interest.
www.amdreammortgage.com/glossary.php[This message has been edited by OKflyboy (edited 03-06-2008).]
|
|
|
|
maryjane
|
MAR 06, 10:56 PM
|
|
Does that mean banks gave loans to 'at risk' borrowers (and/or) borrowers bought mortgages they couldn't afford long term?
(Bear with me folks---I've been in an information vacum for 18 months--very little TV-no iternet-a one horse town with a once/week newspaper that is more about local events than news)
|
|
|
|
84fiero123
|
MAR 06, 10:58 PM
|
|
| quote | Originally posted by maryjane:
Does that mean banks gave loans to 'at risk' borrowers (and/or) borrowers bought mortgages they couldn't afford long term?
(Bear with me folks---I've been in an information vacum for 18 months--very little TV-no iternet-a one horse town with a once/week newspaper that is more about local events than news) |
|
Sounds like home, here.
We get a news paper twice a week, and dial up.
Hey don’t knock it Don, you really ain’t missed much.
|
|
|
|
Formula88
|
MAR 06, 11:00 PM
|
|
Subprime is being used to refer to any number of bad mortgages give out. They are typically ARMs given to people with little credit history or who are unable to qualify for a regular mortgage. Technically it's just a rate that's below the current prime rate - typically a teaser for the first few years that adjusts up to prime or more after 1 - 5 years. Now that the subprime rates are adjusting up from the 3%-5% they had when they could barely afford the payments to around 7%-8%, their payments have gone up more than they can afford - so they default.
Both borrowers and lenders are to blame. The borrowers gave these crappy mortgages to people they knew couldn't afford them. Or worse yet, some of them didn't even require verification of credit history. And the buyers were too stupid/greedy to stop themselves from buying a mortgage with a $1500/mo payment when they make $1200/mo.
From another thread, here's a great explanation of the whole thing. It's available as either a Power Point presentation or an Acrobat PDF.
| quote | Originally posted by Marvin McInnis:
From inside the investment community: Subprime Primer (2.4 MB PowerPoint [PPS] file)
This is the most complete but succinct summary of the current problem that I have seen. If I could credit the author of this brilliant piece, I would. All I know is that it came to me by way of some very wealthy people.
Edit: Now also available in pdf format.
|
|
|
|
|
|
Formula88
|
MAR 06, 11:02 PM
|
|
| quote | Originally posted by maryjane:
Does that mean banks gave loans to 'at risk' borrowers (and/or) borrowers bought mortgages they couldn't afford long term?
(Bear with me folks---I've been in an information vacum for 18 months--very little TV-no iternet-a one horse town with a once/week newspaper that is more about local events than news) |
|
Bingo.
That's it in a nutshell.
|
|
|
