Posted on: 12th Jul, 2009 10:13 am
I want to know "Information on characteristics of subprime mortgages "
Hi annyb,
Subprime mortgages are characterized by the high risk they involve. These are loans offered to those having poor credit. These borrowers do not qualify for conventional home loans due to their bad credit and payment history. Subprime mortgages are marked by a high rate of interest which the lenders charge to offset the high risk involved in such loans. The borrower is often not required to make any down payment. Borrowers can get loans even to the extent of 90-100% of the home's value.
Subprime mortgages are characterized by the high risk they involve. These are loans offered to those having poor credit. These borrowers do not qualify for conventional home loans due to their bad credit and payment history. Subprime mortgages are marked by a high rate of interest which the lenders charge to offset the high risk involved in such loans. The borrower is often not required to make any down payment. Borrowers can get loans even to the extent of 90-100% of the home's value.
the subprime market also contained loans that didn't qualify for a variety of other reasons. poor credit was not the sole reason they exist(ed).
for example, a self employed borrower whose tax returns simply couldn't justify the loan requested were allowed to do low- or no-doc loans via the subprime market.
of course, loan to value ratios also had an impact here. since conventional loans had specified requirements for a borrower qualifying for 100% financing, many people who didn't qualify had to resort to the subprime market to obtain their loans.
and i, of course, agree with jenkin that the high risk was at the root of the subprime market.
for example, a self employed borrower whose tax returns simply couldn't justify the loan requested were allowed to do low- or no-doc loans via the subprime market.
of course, loan to value ratios also had an impact here. since conventional loans had specified requirements for a borrower qualifying for 100% financing, many people who didn't qualify had to resort to the subprime market to obtain their loans.
and i, of course, agree with jenkin that the high risk was at the root of the subprime market.
In summary, their initial purpose was to create loans which would allow many more borrowers to own a piece of the American Dream......even if they could not realistically afford it.
yeah i guess you could say there was a little bit of altruism there.
a little bit
a little bit