Mortgage Vs. Government

Posted on February 27, 2009
Filed Under Foreclosed Houses |

With recent news of subprime mortgages being defaulted government is stepping in to regulate all subprime lenders.

What government wants to do is to protect borrowers from high payment adjustments. Example of that would be when you got your adjustable rate loan and your payment was $1,000. Few months later your payment has jumped to $3,000 as your rate was adjusted. What congress wants to do is to regulate this even more and protect borrower.

But will congress be able to satisfy borrowers and lenders? From borrower point of view this is the greatest thing that can happen. But what about lenders? If congress enacts any regulations that may hurt lender’s business, they will eventually change all their lending guidelines.

That would mean that to qualify for a mortgage with credit score of 640 or less will get more difficult. That means that most borrowers will not be able to buy homes at all, unless you put down a significant down.

But there is really nothing wrong with subprime market. If congress can leave lenders alone for next 6-8 months, this subprime worries will correct itself. After those 6-8 months if there is no move, congress can step in. This is an overreaction from many borrowers as well as government that something needs to be done.

Most borrowers that got adjustable rate mortgages received them when property values where moving up. Now market slowed and most borrowers cannot even refinance, as they own more on their mortgage than their property is worth.

Foreclosure in some cases is inevitable and most borrowers will loose their homes. But there are many investors who will eventually get foreclosed houses at discount prices. In 3-5 months these investors will put houses back on market and demand will rise again for homes.

Look at subprime lender stock, look into New Century, Ameriquest and you will find that in recent days these stocks actually moved up due to fact that they can sell their mortgage portfolio quickly.

There are heated debates about subprime mortgages and what should happen next. No matter what the result will be, it will boil down to guidelines. If lenders change them and you have bad credit, there is no way; you will be able to buy a home at all.

Martin Lukac
http://www.articlesbase.com/loans-articles/mortgage-vs-government-120844.html

Comments

3 Responses to “Mortgage Vs. Government”

  1. swtsarina on February 27th, 2009 6:03 am

    Is there such a thing as a government mortgage rate?
    Countrywide told us that for a 30 year fixed rate for a $417k loan it would be 6% because we work for the government and any mortgage company will offer the same exact rate because it is the "government rate". Is this correct? I never heard of such a thing.

  2. GVD on February 27th, 2009 11:05 am

    No, its not correct. There is no such thing. Any FHA or VA approved lender can set their own rates. The government does not give home loans, they insure them so they have little to do with the actual pricing of the mortgage. While 6% is fairly standard right now for a FHA or VA loan, it may vary from lender to lender so you should still shop around.
    References :
    WeFixRates.Com

  3. directlendingplanet on February 27th, 2009 11:07 am

    sorry that is not correct. and even if its a government rate it a little high a good rate for someome with around 700 score is 5.850
    you are a government worker of some kind what is your jobs? there are some programs in some state called "my comunity" that offer a slightly lower rate to police teachers etc. As far as a magic government rate I dont think so. IM A BANKER!
    Asuming your scores are above 680 and you have the income to support such a large loan you should be able to get a loan at 5.850% at least!

    your most likely working with a unqualifiedor inexpiranced broker broker
    References :

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