"Waiter, I' Ll Have A Sub- Prime Steak

"Waiter, I' ll have a sub- prime steak.

Order with those words and your waiter will check you for two heads. Make it medium- rare" . If you eat meat, you want the prime- cuts. So what motivates mortgage loan officers toward sub- prime lenders? In fact, no one wants sub- par unless you' re playing golf. Money of course! Mortgage lenders weigh risk, and value, return.

Typical capital formula: the greater the risk the greater the return. They risk loaning money that may or may not get repaid. They risk loaning money on real estate properties that lose value. They risk loaning money at a rate that falls well below fluctuating interest rates over 30 years. High risk loans recommend high rewards. Suspicious lending practices put the buyer at risk. Commissions are issued and the home buyer or refinance candidate gets or keeps their home.

The loan document may bury the facts. "Just sign here. Predatory lending practices bring further harm to families hoping to fulfill their dream of home ownership. You can move into your new house next Monday. " No reason to heed" truth- in- lending" ; get the sale, "seal the deal" because the borrower pays no matter what. Families with poor credit histories suffer further economic and social stigma. According to" Inside Mortgage Finance" , sub- prime mortgage originations have increased 10 fold since 199During 2006& 2007, 25% of all mortgage originations were sub- prime. Maybe they should know better, but who will tell them?

Subprime usually means that a loan is approved for borrowers with" tarnished credit profiles" . Like the Scholastic Aptitude Test, the higher the score, the better( 850 tops. 300 not so good) . As you know from" Have you checked your credit score" advertisements, FICO( credit scoring system developed by Fair Isaac& Co. )scores guide loan officers when assessing a borrowers creditworthiness. Subprime loans are approved for borrowers with FICO scores at or below 60 Families lacking financial resources wanting a home are easily enticed by the sub prime lender. A non- profit organization study indicates that just about 50% of the loans in East Flatbush are sub- prime. It all starts with a phone call by savvy telemarketers promising loan approvals on a$ 400, 000 house in East Flatbush( Brooklyn, NY) to a bus driver.

Karl Dorismund said, "From the beginning they( the lender) tell me the mortgage will be$ 2, 000 or 2, 100 a month. Dorismund signed a high- interest mortgage with no- money down. Can you believe how much it is? $2, 900! " Mr. In my town, 10% to 20% is necessary before a loan is approved. Borrowers bailout. Cathy Mickens, an advisor to first time home buyers says, "On any one block, we might see. three or four for sale signs. we didn' t see this last year at this time. " A study by a New York non- profit reveals that the loan patterns for poor and minority neighborhoods. has the highest concentration of sub- prime loans with the highest level of defaults.

Sub prime lenders don' t like moral solutions. It's all in the small print, and the details seldom are mentioned to the sub prime borrower. It is immoral to entice borrowers with light burdens at first only to break their backs later. Subprime lenders made$ 587 billion in new mortgages in 2004, up from$ 390 billion in 2003, according to National Mortgage News. Less fortunate people need helping hands. Mortgage marketing by sub prime lenders reminds capital markets that the less- educated city dweller gets trapped by socio- ecocnomic limitations. This does not mean setting them up for failure.

Habitat For Humanity affiliates provide volunteer labor, money and building materials to construct" decent houses" for the sub prime borrower. This means creating opportunity. Homeowner's make a small downpayment, and must pay a reasonable mortgage. "Habitat houses are sold to partner families at no profit and financed with affordable loans. " Every Habitat For Humanity home- owner is a sub- prime borrower. Habitat for Humanity works to eliminate substandard housing Habitat works to provide homes for families living in sub- standard apartments. In fact, many would not qualify for loans from a bank or mortgage company. Habitat has provided homes for more than 1 million people in 3, 000 communities. Your donation to Habitat for Humanity gives hope to qualified and committed sub prime borrowers.

Habitat for Humanity( and organizations like it) offers a key to one family at a time.