Author: Michael Peterson
Article:
Christoper Dodd, U.S. Banking Committee Chairman and U.S.
presidential candidate, announced on Monday that he has
requested executives from the nations top bad credit mortgage
companies to testify at a hearing on this Thursday. The five bad
credit home loan companies are: HSBC Holdings Plc, Countrywide
Financial Corp., WMC Mortgage, First Franklin Mortgage and New
Century Mortgage Corp.
Rep. Barney Frank, Massachusetts Democrat, announced last week
that he plans to introduce legislation that would restrict
future subprime lending, bad credit home loans and bad credit
mortgages.
What is worrisome, is whether, or not Congress will assist in
making substantive changes in the subprime mortgage industry, or
just "knee jerk" changes, that would only send bad credit
mortgage companies into further downward spiral. It appears,
that Congress will limit its reach to bad credit home loan
companies; however, the hearing that the House Financial
Services Committee will have on March 27, will focus
specifically on subprime and predatory lending.
I'm sure that the executives called to testify, in these
hearings, will cite the industry practices of other subprime
lenders that specialize in bad credit loans for cars, jewelry,
furniture and etc. If these executives draw "straight lines" of
comparison from their practices, to the practices of other bad
credit lenders, the entire subprime industry could be legislated
right out of existence.
The bad credit auto loan industry could find the same "bull's
eye" drawn on its back, that the bad credit home loan industry
has drawn its back.
Congress really needs to make sure that these lenders separate
subprime statistics from Alt-A statistics. I think this number
might shed a little light on the true problem.
During our recent real estate boom, four out of 10 home sales
were second homes and investment property. Second homes and
investment properties are always non-conforming loans, but not
always subprime loans. The underwriting rules, of the most
generous bad credit home loan companies, did not allow most
subprime borrowers to qualify for a "Pay Option ARM." Only
borrowers with good credit, seeking good credit mortgage loans
and Alt-A borrowers with a minimum of a 640 mid credit score
could even qualify for them.
The Pay Option ARM, also know as "Pick-A-Pay" has proved to be
the most "deadly" for borrowers, of all the exotic loan
products. It employs negative amortization, and if borrowers
"pick" the sub-interest only monthly payment, while the rate and
payment are adjusting upward, in just one year they can owe
more, each year they do this than the year before!
Compound this with declining real estate values and after one
year a typical California borrower, could very quickly be in
hole $50K!!!
If you need a bad credit home loan, bad credit mortgage, bad
credit auto loan, or a bad credit car loan apply today, while
there are still great programs available to help you get
financing - no matter how bad your credit is.
About the author:
Michael Peterson works as a freelance writer for two websites:
BadCreditBMWLoans.com, a website that
specializes in helping people get
bad credit auto loans.
EmbarkFinancialllc.com
No comments :
Post a Comment