They’re baack! Subprime mortgages are sneaking back into the market. One such mortgage required 35% down, $10,000 in fees, and has a whopping 10.9% interest rate. I’m guessing the fees and penalties should a payment be missed would be absolutely nosebleed. The borrowers said they planned to refi into a normal mortgage this year. Hmm, why do they think they’ll be able to do that when they couldn’t do it now?
Mortgage lenders are tip-toeing back into the subprime swamp. Surely this time is different. We will be more cautious, they say. Maybe. But in six months or a year, others probably won’t be nearly as cautious, banksters will start securitizing this risky glop, and due diligence on mortgages will go flying out the window again.