The Real Problem with Subprime Mortgage Loans

Posted on April 21, 2007
Filed Under Mortgage Smarts, Personal Finances | 2 Comments

Subprime loans are high-priced, high-interest products designed for borrowers with damaged credit, or in some cases, no credit. In other words, mortgage lenders, with and without brokers help, have underwritten mortgages for people that in many instances should never have been “qualified” for those loans in the first place.

Lest anyone think this sounds harsh, let’s look at the numbers. We’re talking nearly 15% of adjustable rate subprime loans being delinquent already. A million more mortgages will reset to higher rates this year, and another 800,000 next year. These folks can hardly keep up with their payments now. What do you think is going to happen when those payments increase half again or even double in many cases?

Yeah, foreclosure city. It’s already happening big-time, driving down property values and costing everyone. Even those with good credit and conforming mortgages get hurt, especially if they’re trying to sell, and seeing home values in their neighborhood depressed by nearby foreclosures at fire-sale prices.

The thing I can’t understand is why anyone is so surprised at this. I mean what else did anyone expect? The answer to the question of “the problem with subprime mortgages” continue reading….

How Credit Card Companies Exploit The Desperate

Posted on April 14, 2007
Filed Under Credit Cards, Personal Finances | Leave a Comment

I get totally disgusted seeing how credit card companies go to ever-greater lengths in contriving to squeeze a buck out of people least able to afford it. This, despite all the supposed credit-reform legislation and fair practices hooey that gets bandied about.

Picture someone down on their luck. Can’t find a job, money’s tight, and they believe they’re out of options. Maybe they just can’t catch a break, or perhaps the situation is one of their own making. They might have some sort of health or mental problems. For whatever reason, they’re desperate for some financial breathing room.

Upon opening their mailbox one day, they find one of those “Pre-Approved Credit Card” offers with their name on it. There it is, the answer to a prayer. It says “Congratulations, You’re Pre-Approved, Enjoy the Benefits….” yada, yada, yada…. continue reading….

Categories



Recently