Subprime Loans History
December 3rd, 2009
Subprime Loans History
Question: Why do people get subprime loans? It’s not THAT diffucult to get approved for a fixed rate………?
I got between 5 and 6% about 3-1/2 years ago, and my credit history was not good, and I had no money in the bank. I had defaulted loans, 2 foreclosures, and lots of late payments in my credit past.
I would NEVER get a variable rate loan, and I never understood why anybody would, ESPECIALLY if they are on a limited fixed income. Why would anybody want a house note that can go up?
Difficult (typo), so calm down OCD people.
Answer: Subprime does not equal adjustable. You got a subprime fixed rate loan.
"Subprime" refers to the type of borrower, someone who does not meet normal lending standards, including someone who has a history of defaults and foreclosures.
You are wondering how you got this fine rate. Possibly it's legitimate if you had a huge down payment, which would offset the credit history you described and lift you out of the subprime category. Unfortunately, you were probably dealing with a mortgage originator who planned to sell the loan quickly and didn't care if it got paid off. (1) produce loan (2) pocket commission (3) sell loan (4) repeat. It has happened that loan originators have made false statements to lenders and even forged paperwork to make a subprime borrower look good, all without the knowledge of the customer.
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