‘The New Subprime’ Mortgage: Risky Loans Emerge in Twist on Seller Financing
Mortgages resembling the kind of subprime loans that were blamed for the foreclosure crisis are creeping back into the market, leaving some experts and regulators alarmed. The loans give a relatively new twist to seller financing, putting homeownership within reach of borrowers who can’t qualify for a conventional mortgage. But they also carry terms that some experts say are predatory.
“Seller financing is the new subprime,” said Wayne Sanford, a consultant who helps some seller financiers vet borrowers. It’s a “trend,” one top regulator said, that he’s “definitely watching very closely” because the mortgages have the trappings of risky pre-crisis loans: They charge sky-high interest rates, often turn a blind eye to credit scores and force refinances within a short period of time.
And borrowers only months out of foreclosure are able to qualify for them.
‘The New Subprime’
Seller financing — in which the seller of a property lends money to a buyer to purchase it — isn’t new. It was common in previous eras, then was mostly used by individual sellers unable to find buyers who qualified for conventional mortgages.
Now a growing number of real estate investment firms specialize in these transactions. They snap up foreclosures and sell them — along with home loans — to borrowers with less-than-stellar credit. The financing has flown mostly under the radar since the financial collapse, perhaps accounting for the widespread belief that a person who has been in foreclosure must wait three years to qualify for a mortgage again. Tim Dwyer, president of title insurance company Entitle Direct, estimates that fewer than 10 percent of current mortgages are seller-financed.
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Right, just another disinfo article put out there by the bankster racket. THEY (banks, corporate, mortgage brokers, title agents, realtors) don’t want sellers to sell their own homes, gee, that would eliminate the middle man syndicate.
This method of financing has been around FOREVER! Almost all of the No MOney Down Courses of the 80’s were all about this and it has been done successfully thousands of times. So what… this story is just another scare tactic by our Govt. (remember them? Those same guys who’ve been passing the fraudclosure monies back and forth beweten the Banksters and their own self interestes) and the Banksters (remember them? the 0000’s new definition of thief!).