Summary
During the past few years, mortgage brokers and financial service companies have been developing creative and aggressive ways to help prospective homebuyers, even those with low credit scores, get their piece of the American Dream.
But as more of those borrowers are defaulting on their sub-prime loans, some lenders are filing for bankruptcy and others are tightening their lending standards - which could have an effect not only on borrowers who don't have great credit scores, but also on those who have good credit, according to some experts.See the full content of this document
Extract
Sub-Prime Fallout Could Be Extensive
Sub-prime loans usually carry a higher interest rate to compensate for the lender's increased risk. In 2006, sub-prime loans totaled about $640 billion, or 20 percent of new mortgages, according to Credit Suisse Group, an international financial services company.
Many sub-prime or near-prime loans were sold as interest only, adjustable rate mortgages, option ARM or negative amortization loans.Interest only loans require mo...See the full content of this document
Sponsored links
