Sub Prime Mortgages: Baseless Commitments

Mortgage lenders weigh risk, return, and value. They risk loaning money that may or may not get repaid. They risk loaning money at a rate that falls well below fluctuating interest rates over 30 years. They risk loaning money on real estate properties that lose value.

High risk loans recommend high rewards. Commissions are issued and the home buyer or refinance candidate gets or keeps their home.

Suspicious lending practices put the buyer at risk. The loan document may bury the facts. "Just sign here. You can move into your new house next Monday." No reason to heed "truth-in-lending"; get the sale, "seal the deal" because the borrower pays no matter what.

Predatory lending practices bring further harm to families hoping to fulfill their dream of home ownership. Families with poor credit histories suffer further economic and social stigma. Maybe they should know better, but who will tell them?

According to "Inside Mortgage Finance", sub-prime mortgage originations have increased 10 fold since 1997. During 2006 & 2007, 25% of all mortgage originations were sub-prime.

Subprime usually means that a loan is approved for borrowers with "tarnished credit profiles".

Echievements is a self-improvement article library. Go here to read the articles cited in this article. Ray Randall, is a registered investment advisor.