Risky Loans Just Became Riskier - Real Estate and Technology News for Agents, Broker

Risky Loans Just Became Riskier

The government use to favor disadvantaged borrowers, but not any more. Risky loans just became riskier. The new "Restoring American Financial Stability Act of 2010" may restore some, but not those who really need it. Right now, its almost impossible to acquire a home loan, banks just arent lending. You need to have stellar credit and a surplus of collateral for banks to even consider your loan application, which puts most of us out of range of buying a new home during the recession.

Under the new rules, borrowers who would normally qualify for a loan with a liberal repayment plan, which would be considered risky and have higher costs associated with it, now have an indirect cost attached to them as well, making an already high cost loan even more expensive. This is a time when the American people are in need of a hand up, a little assistance to recover, but it seems as though the new Act of 2010 is going to put the screws to those who need the help the most.

The result of the new Restoring American Financial Stability Act of 2010 is going to split everyone into qualified and nonqualified mortgages, kind of sounds like the haves and have nots. This may price many out of the housing market all together, and we will soon see a greater price difference between the new loan types.

The worse case is that the market for nonqualified loans and mortgages will simply disappear altogether, leaving a huge segment of the population without options for purchasing a home. Remember, we were supposed to be the nation with a strong middle class, lets hope we can turn it around and keep our homes.

Read the full article from Inman News

Posted on August 02, 2010 12:17:02 by Blog Author