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Obama pushes banks to make home loans to people with weaker credit

Discussion in 'Society and Culture' started by ethics, Jun 27, 2014.

  1. ethics

    ethics Pomp-Dumpster Staff Member

    Got that? The President who blamed banks on the Great Recession is urging the same banks to give out money to people with shit credit. :)

    Of course, that's older news (that particular one is from April 2013) but guess what banks are doing?

    Credit-Card Lenders Pursue Riskier Borrowers - WSJ

    YAY! It worked! The Great Recession doesn't happen with this strategy, so let's do it again and blame banks again!

    Lenders are courting risky credit-card borrowers more aggressively than they have since the financial crisis in a bid to jolt revenue in a period of sluggish growth and tight regulation.

    Banks and other lenders issued 3.7 million credit cards to so-called subprime borrowers during the first quarter, a 39% jump from a year earlier and the most since 2008, according to data provided exclusively to The Wall Street Journal by credit bureau

    About one-third of all credit cards issued in that period were to subprime customers, the biggest share in six years, according to Equifax.

    The poor credit holders have higher interest rates, folks, banks's goal is to make money while minimizing risk.

    The average rate for such customers was 21.1% in the first quarter, up from 20.2% a year earlier, according to research firm CardHub.com. In contrast, the highest-quality borrowers paid 12.9% on average in the first quarter, virtually unchanged from a year earlier.
     
  2. Biker

    Biker Administrator Staff Member

  3. Greg

    Greg Full Member

    I am now a baby investor, buying houses in Arizona and renting them out. I put 25 percent down because that seems to me to be a reasonable number. As an investor they have determined I am easier to milk because I have the money, so I pay an average of 4.75 percent for a 30 year fixed rate mortgage.

    Furthermore my finance company delayed my most recent closings because they had noted that I had had too many credit checks in recent months. You guessed it, the people who wanted me to explain my 6 credit checks, 3 for each property was the same company that had initiated those same credit checks. No kidding, I don't want to reveal their name, let's call them X Financial, but I purchased 2 properties earlier this year, there were 3 credit reports for each property, and all 6 credit checks stated X Financial as the originator. And they wanted me to sign the statement before they would proceed with my closings. At least they had the decency to fill in the reasons/explanations themselves and asked me only to sign and return. On account of this my closings -- 2 more properties -- were delayed a day in order to send this signed statement back to their underwriting department.

    I joked with my friend Debbie who works for them, what will they want next??? I suggested:

    "I hereby certify that you are reading the paper that you are holding in your hands.

    signed ________________________ date______________"

    We all got a good laugh out of that but my closings were still delayed by a day.


    Note: Investing out of state is too much work to buy one property at a time. I buy 'em in twosies. Note also, I am a baby investor because baby investors are limited to 4 investment properties -- excluding a home mortgage -- and now I have my four. At the present I would be denied credit to make a down payment on a free lunch.

    Also in the same period my FICO dropped from 800+ to around 730-740. Why? You guessed it: too many credit checks.

    Meanwhile people who really can't afford a down payment on a free lunch are being awarded credit on a wholesale basis. You can understand why I'm a bit upset with government policy and its "regulation" of the finance industry.

    Fortunately for me my deals are done, and in several months my FICO will be back to 800+. But being in the baby investor category they will still not lend me any more money. The rule is 4, 4 is all you shall have, and you may not have more than 4 investment mortgages. Never mind that poor credit risks step ahead of you in line and get a better interest rate. You are a filthy investor, we don't want your money because the government pays us to make bad loans, and your credit is not sufficiently bad to qualify to buy a property you can afford. That treatment is reserved for people who cannot afford it.
     
    Last edited: Jun 27, 2014

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