Sub-Prime Mortgages---Will you cash in?

rbg

I've been thinking alot about this whole business of predatory lending and subprime mortgages. The Daily News is reporting that 6,107 people in Brooklyn are at risk of losing their homes once the interest rates on their mortgages spike. The article reports that as many as 91,000 people could lose their homes in New York state by the end of next year. That's alot of homes. Would you buy one of these homes? And do you think all of those foreclosed homes will drive down the prices of condos and co-ops in Brooklyn?? Just pondering....

tiffanylawrence

Yep. I'd buy one. Why not? It's silly to think that somebody wouldn't buy my home if I had crappy credit and got a sub-prime mortgage because I was either financially uneducated or fiscally irresponsible.

What's the alternative? Everybody sit and look at the homes and feel sorry for the people?

If I could buy one, I would. And if I can't, somebody else surely will in a New York minute.

armchair_warrior

when there is chaos there is always opportunity. when those places get foreclose those waited for some sort of deal would get a deal.

doesn't sound nice but its part of life.

oiseau

Don't worry, the government will bail them out.

Now had I known the government would bail them out a few years ago, I would have went out and got myself a sub-prime mortgage.

Dang! And I still have to pay taxes!

doctorj

Oiseau wrote:
Now had I known the government would bail them out a few years ago, I would have went out and got myself a sub-prime mortgage.

I was all up for one, but at the end of the day, trashing my credit rating and pretending not to have a steady income just seemed like too much hassle.

oiseau

Is that the only reason to get one? I thought it was for the subprime rates? Lower interest payments, etc.

whyfi

Yeah, only people that can't get an A paper loan go sub-prime... except for a few strange times in the market where subprimes were beating out A lenders. For about a month, a couple years back, I was getting customers better 30 year fixed loans at subprime banks with a small buy-down than they could have gotten with an A lender... anywho...

quig

Some things to keep in mind:

If these people are underwater with their mortgage, maintenance on the home would probably move down on the list of priorities.

A number of these homes get "absorbed" way before foreclosure (best of breed).

Many of these homes are in East New York and Bushwick not in Park Slope.

I’m not saying that it can’t be done, but a lot of (very smart & liquid) people are in this racket. So caveat emptor.

Here's a quote from the Financial Times:
“Some 52% of loans made to black people were subprime and 80% of those subprime loans are exploding ARMs. About 70% of subprime loans were booked by brokers who had no fiduciary responsibility to the borrowers they advised”. One person says “This could be the largest loss of African-American wealth in American history”.

Don’t be surprised if you don’t get a basket of fruit on move in day.