(956) 399-1199 • P.O. Box 1064, San Benito, Texas 78586

Subprime Lending Coming Back

June 4th, 2014    •  

Subprime Lending Coming Back

sub prime mortgage lenders

Customers with bad credit reports were shut out of the mortgage market after the real estate bubble burst, but now a handful of small lenders are starting to offer sub prime home loans once again.

The once toxic adjustable-rate mortgages or “ARMs” that led to the foreclosure of many homes during the housing bust are being offered to borrowers who have credit scores below 640.

These loans come with high interest rates from 8% to 10% and require down payments from 25%-35%. Long gone are loans with little or no down payments and low introductory interest rates.

Bill Dallas from Skyline Financial in Calabasas California says that some borrowers who are trying to rebuild their credit are more than comfortable with this and view it as their best chance of improving their credit profiles and get a home loan at the same time.

Most of the applicants for these types of loans are young, first-time homebuyers and former homeowners who have had foreclosures in their credit history.

They are customers who want to buy a home but cant says Dallas a Residential Mortgage Loan Originator at First Franklin, who was a subprime lender that closed during the mortgage meltdown.

Since Fannie Mae and Freddie Mac wont back these loans, these borrowers have nowhere else to turn to.
The Federal Housing Administration does continue to support low credit score borrowers, but they have hiked their fees and premiums.

The Consumer Financial Protection Bureau protects borrowers by not allowing lenders to implement prepayment penalties nor carry interest rates that increase after default. Borrowers must also be provided with homeownership counseling from counselors approved by the U.S. Department of Housing and Urban Development.

Wells Fargo and some small lenders have recently lowered the minimum credit score it requires of borrowers to get FHA loans.

FHA spokesman Tom Goyda says applicants with credit scores from 600 to 640 fall within FHA guidelines and Wells Fargo is now approving these types of borrowers.

If you currently own a real estate note and are in need of immediate cash, we would like an opportunity to bid on and possibly BUY YOUR NOTE! With over 20 years experience in the private note industry, our experienced staff is available to provide you with a quick quote and help make it easy for you to get the most for your note. Visit us today at www.notebuyingusa.com or contact us at 1-877-399-1211. If you are considering offering owner financing when you sell your property, please click here to receive your free copy of “10 Critical Steps to Creating a Sellable Note”.
This information is intended to be used as a general guide. It is not intended to constitute legal advice and is not a substitute for the advice of an attorney. While every effort has been taken to present the information accurately, this document may not be infallible. No warranty is made that these materials are current, complete, accurate, or suitable for any particular purpose. You should seek advice from your attorney before proceeding with any real estate transaction.

1. Subprime mortgages making a comeback, Les Christie, March 21, 2014, CNNMoney, http://money.cnn.com/2014/03/21/real_estate/subprime-mortgages/index.html, Retrieved 4/15/2014.

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