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Foreclosures Doubled
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Post Foreclosures Doubled 
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In a potentially ominous sign of snowballing troubles in the real-estate market, new figures show foreclosures in Hennepin County doubled during the first three months of this year compared to the same period last year.

Between January and March, 1,203 houses were sold at Hennepin County sheriff's auctions, according to county records. During the first quarter of last year, there were 601 home auctions.

.......

"This is not just an inner-city problem. This is a Minnesota problem," said DFL Sen. Linda Higgins of Minneapolis, one of several legislators pushing for new laws on mortgage fraud and predatory lending practices. The Senate is expected to vote today on the first of three bills on the issue.

More from Star Tribune


Should we blame the subprime mortgage companies or should we blame American home owners for buying what they CAN'T afford?

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Post One Vote For The Mortgage Companies 
I wholeheartedly vote to blame the mortgage companies. It is their job to screen applicants and reject applications from people who are not financially qualified to take on a huge, unforgiving debt.

I used to have a great deal of faith in the integrity of the mortgage industry. Now I get mail solicitations every single day from some fly by night mortgage outfit that wants to loan me money instantly, even in excess of the value of my home. These people are clearly sleazebags with no ethics whatsoever. I have no doubt at all that many of them coached their ignorant, naive applicants to fill in false information on their applications, or encouraged the use of "non-documented" income on applications.

In the Inner City, they call them "house flippers". They get an ignorant, poor applicant, sell them a house on a contract for deed (because they wouldn't qualify for a mortgage), they fail on the payments as expected, and the seller gets the house back to sell again. How is it any different for a subprime lender? They get all the closing costs and fees (thousands of them), get the mostly-interest monthly payment, wait for the unqualified buyer to inevitably fail, and get the house too. What a deal.

They are thieves in business suits.

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Post Subprime Factor In Foreclosures 
http://www.startribune.com/462/story/1139927.html

More smoking gun evidence. This article states that subprime lending has increased 10 times in the last ten years, and 13% of those loans are foreclosed. 900 of the 1610 foreclosures last year were in North Minneapolis, and they're running at over 50% in this year's record pace. Legislation is under consideration to stop "abusive lending practices" such as subprime.

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Post SubPrime lending is not a dirty word 
Gentlemen and Ladies:

There is a huge amount of misunderstanding about the term Sub Prime lending.
It is exactly what the name states. Sub Prime lenders offer housing loans to consumers whose credit score is under a certain number...generally under 680 or 620 depending on the lender.
The idea of sub prime lending is NOT evil, but many of the companies in this area got greedy. With proper regulation and enforcement, sub prime lending will remain a vital and helpful way for people with less than prefect credit to purchase a home.

Without sub prime lenders, anyone who had a charged off account, unpaid medical bills that were in collection, or more than 2 or 3 late payments on their credit report would have trouble being able to qualify for a home loan. In many cases now all it takes to move from Prime credit to Sub Prime credit is to be laid off for a few months.

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I'm not intimately familiar with subprime, but I do have some general suspicions.

Some businesses freely accept checks, even though they know that they are exposing themselves to high risk. They assume that they will make sufficient volume on the good ones that it will offset the bad.

I don't have a problem with a business taking a calculated risk. But when you do things like granting a loan without verifying income, that's essentially what the lawyers call "deliberate indifference". I've never been able to buy a car, much less a house, without verification of my employment and income.

IMHO, people who don't check these things out don't want to know. They know they'll make a profit on the millions of others with inflated interest rates and repos. Pure greed.

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Post Due Diligence 
As I said, if the existing rules were enforced and a few more in place, sub prime loans and lenders would continue to provide a valuable service.

Too many lenders have been allowed free rein for years though, and then when they get caught they were given a "slap on the wrist" penalty. With them losing their shirts (and everything else) now as a result of their fraudulent lending, the sub prime market is drying up and many deserving and credit worthy people may not get the home they'd hoped to buy.

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I'm still stumped by the practice of the "No-Doc" loan. What possible explanation can there be for a respectable lender to loan someone six figures, and have no evidence of their ability to repay but their word? And how could the law allow it? Seems like deregulation run amok to me.

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