Upside Down Mortgage

Archive for August, 2008

Subprime Mortgage Crisis Explained

Question: Subprime Mortgage Crisis?

Okay so I'm writing my term paper and I have a quick question...so people began buying these subprime mortgages because they were being offered at low interest rates and loose credit requirements but why did so many people have to file bankruptcy or forclose? Please explain this to me...I pick best answer!

Answer: I'm buying a house now that was foreclosed, so here's the deal:
a couple of years ago some people decided they wanted to buy a house because everybody said that pretty soon only the rich people would be able to afford a house anymore, or probably because they thought they could make a ton of money on it.
So they found this house for 300 thousand dollars.
A standard loan on 300K would mean that they would have to put 20% down, but that's $60,000 and the payments would be about $1800 because these people didn't have very good credit so they couldn't get a good interest rate. This was way more than they could afford.
So along came a "subprime lender"... which is a scum sucking creature that told them... no problem. We can give you a loan for the entire amount, no downpayment needed, because we know that your house will be worth more than 300k in a couple of years so you could always sell it if you wanted. The deal is you get to buy this ARM (adjustable rate mortgage) which means we will give you a really low interest rate for a couple of years, and then we jack it up big time to make up for the difference.
The idea is that they would sell the house before the interest rate reset on this ARM. (usually 2-5 years).
So they got into their house paying only 1000/month, with no downpayment.
Now after a couple of years there were a whole bunch of these people that needed to sell their house before their ARMs reset and all of the sudden everybody wants to sell their house, and when there is more supply than demand, then house prices go down.
Now the people with ARMs couldn't sell their houses for more than what they owed on them so they could get out of the deal before the interest rates reset.
So all of the sudden the interest rate jumps up and instead of their 1000/month mortgage, they have to pay 2000, and home prices dropped so low that people owed a lot more than the houses are worth.
So they quit paying their mortgage because they felt like they're throwing their money away. They're putting twice as much money per month into a house that is worth half as much.
So then the bank kicks them out and takes their house away and tries to sell it to recoup some of their losses.
That's where I come in: I get the same house for 180,000 and because I'm not stupid, I get a conventional loan and my payments are around 1300 and are fixed (which means I don't have to worry about them ever going up). And I got a decent interest rate because my credit was decent.
the moral of the story:
patience pays off.

Subprime mortgage crisis explained

If you're new around here, you might want to subscribe to our Upside-Down Mortgage RSS feed. It's quite likely the only feed of it's type on the internet!

Mortgage Fraud Forum

FOR IMMEDIATE RELEASE

Fighting The Economic Crisis The Unconventional Way

Singapore - Almost everyone is worried about the gloomy days ahead, and companies are tightening their budget and stop hiring staff. However, what most companies do not realize is that during such periods, this is exactly the best time to steam ahead. This is the time where new opportunities flood the market and the best time to grab market share.

Eric Teng, Mob Advisor, suggests that companies should open their eyes and look out for opportunities for growth, rather than merely cutting expenses. There will be some companies that are growing in this tough economic period and these companies are the ones that should start to brainstorm ideas to make that leap in front of other competitors. If they don't do it, someone else definitely will. Business is not a matter of life and death, with the Internet; it is a matter of speed and death.

Edison Lee, the CEO of MobTwo.com, said that this economic crisis is a double whammy not just by the mortgage problems but also the huge impact from fraud investment companies such as the Madoff case. This crisis affects even Harvard University, one of the richest universities in the world, losing about eight billion dollars in the first four months of its fiscal year. A study from Harvard University found that happiness is contagious and this effect continued through three degrees of separation. Edison Lee added, "We believe this is the way we will fight through the economic crisis, with the contagion of happiness and optimism. While it is crucial for companies to manage expenses, we must also innovate our way into high growth and high profitability within the next two years."

About MobTwo.com - MobTwo.com has a diverse portfolio of Internet properties including advertising services, social networking sites, elearning systems, consumer and technology products, business services, gaming software, outsourcing solutions and Internet search solutions. MobTwo.com is based in Singapore.

#######

Contact Person: Tiffany Li
Contact Email: [email protected]
Contact Number: +65 65230833

Company Name: MobTwo Pte Ltd
Company Website: <a href='http://www.MobTwo.com/'>MobTwo Internet Directory</a>

#######

About the Author:

Article Source: ArticlesBase.com - Fighting The Economic Crisis The Unconventional Way

Housing Depression - The Truth Behind the Statistics Part 2/5

Loan Modification Department

Question: Loan modification Skip Mortgage?

hi,

I have mortgage with chase and I am trying to modify my loan for a lower interest rate. After talking to the loan modification department, adviced told to skip my payment for 3 months, and set the money aside. My question is
1) Will it hit my credit report and hurt my FICO score?
2) if so how long it will stay in my credit report.

Thanks in advance for the advice.

George

Answer: Hello Nasim,

This is unethical and incorrect advice. You signed a document (note) which obligates yourself to pay the debt. I would get that persons name and let them someone at Chase know about it next time you call. It will certainly show up as a 90 day late on your credit and may put you in foreclosure depending on your state foreclosure guidelines. Then you find yourself paying foreclosure fees just to modify your loan. It is true that some lenders were not doing modifications to borrowers who are current but since the new Obama plan, a lot of these rules have changed. I suggest calling again and apply again. I believe with Chase, you can do it online.

Discover the Pathway to Get the Hidden Players at Your Loan Modification Department