in this piece CNN Money reported recently that many borrowers who qualify for first-tier loans are being fed so-called subprime loans instead, meaning that they are paying way too much up front in costs and junk fees, not to mention being saddled with high interest rates and a prepayment penalty in the event that they wise up and try to get out of their situation. As pointed out in the item
… sub-prime loans are usually designed for borrowers with damaged or sketchy credit histories. Lenders charge higher rates to these customers to offset the extra risks they take on. Prime loans are usually granted to borrowers with credit scores of 650 or higher …
just taking a guess I’d say that many mortgage lenders, desperate to stay afloat, may have been slipping in these killer loans as a means to stave off the kinds of crashes that have left their industry half-empty. but hey, what do I know?
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