After reading an article on one of my favorite websites, CNBC.com, concerning the subprime mortgage mess (http://www.cnbc.com/id/22901531), I decided to comment on this subject that has plagued our industry and made front page news. (There is nothing like seeing the industry you work in splattered across the headlines like a disaster.)
First of all, there are many sides to blame for this mess. The lenders who gave borrowers loans who most likely did not qualify credit wise but fell in to the lender's now sorry guidelines. The mortgage officers (like myself) who thought we were helping the credit challenged get a house, to give them some hope and to give a brand new start to some people who might have been down on their luck with credit problems that weren't necessarily their fault.
Not only did it not make sense to give loans to people with bad credit, the loans themselves had high interest rates and steep pre-payment penalties. These folks needing a subprime mortgage already have shown that they can't handle payments so let's make it worse by making it real hard to make payments on the biggest loan they'll have. Not real smart.
I always give advice on improving a credit score when sitting down with a client. When selling a subprime loan, it was probably to much advice for someone to understand.
There is a reason that people qualify for a subprime loan. That is what a credit report is for. The credit report screams out page by page why there is a good chance the person who's history is on the credit report most likely would default on their mortgage.
No one listened to the screaming.
If you have any comments on this article, I would love to hear what you have to say! Feel free to comment below.
Thanks for reading!
Dan Tenchall
Great Lakes Mortgage Funding
For FREE Mortgage tips, Mortgage Calculators,must have articles and much more please visit my website!
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(586) 532-0600
dan@glmf.com
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