Comments on: How the subprime mortgage crisis works http://blogs.howstuffworks.com/2007/11/28/how-the-subprime-mortgage-crisis-works/ The HowStuffWorks Blogs Tue, 08 Dec 2009 21:08:44 +0000 http://wordpress.com/ hourly 1 By: FICA score http://blogs.howstuffworks.com/2007/11/28/how-the-subprime-mortgage-crisis-works/#comment-11665 FICA score Wed, 15 Jul 2009 04:58:10 +0000 http://brainstuff.howstuffworks.com/2007/11/28/how-the-subprime-mortgage-crisis-works/#comment-11665 Great post! A lot of very useful information. Great post! A lot of very useful information.

]]> By: The Broker http://blogs.howstuffworks.com/2007/11/28/how-the-subprime-mortgage-crisis-works/#comment-10368 The Broker Sat, 20 Jun 2009 05:56:01 +0000 http://brainstuff.howstuffworks.com/2007/11/28/how-the-subprime-mortgage-crisis-works/#comment-10368 Interesting Article. Thanks for the read! Interesting Article. Thanks for the read!

]]> By: Mortgage http://blogs.howstuffworks.com/2007/11/28/how-the-subprime-mortgage-crisis-works/#comment-9812 Mortgage Thu, 11 Jun 2009 13:38:26 +0000 http://brainstuff.howstuffworks.com/2007/11/28/how-the-subprime-mortgage-crisis-works/#comment-9812 What happens to you when you lose your job while paying the mortgage? What happens to you when you lose your job while paying the mortgage?

]]> By: Lynne Philips http://blogs.howstuffworks.com/2007/11/28/how-the-subprime-mortgage-crisis-works/#comment-9459 Lynne Philips Thu, 04 Jun 2009 14:27:11 +0000 http://brainstuff.howstuffworks.com/2007/11/28/how-the-subprime-mortgage-crisis-works/#comment-9459 A very well written article. Thanks for the good tips! A very well written article. Thanks for the good tips!

]]> By: MerrY http://blogs.howstuffworks.com/2007/11/28/how-the-subprime-mortgage-crisis-works/#comment-8049 MerrY Sat, 16 May 2009 14:47:55 +0000 http://brainstuff.howstuffworks.com/2007/11/28/how-the-subprime-mortgage-crisis-works/#comment-8049 I found your blog on google and read a few of your other posts. I just added you to my Google News Reader. Keep up the good work. Look forward to reading more from you in the future. I found your blog on google and read a few of your other posts. I just added you to my Google News Reader. Keep up the good work. Look forward to reading more from you in the future.

]]> By: What is predatory lending? - The Blogs at HowStuffWorks http://blogs.howstuffworks.com/2007/11/28/how-the-subprime-mortgage-crisis-works/#comment-6405 What is predatory lending? - The Blogs at HowStuffWorks Fri, 01 May 2009 03:01:46 +0000 http://brainstuff.howstuffworks.com/2007/11/28/how-the-subprime-mortgage-crisis-works/#comment-6405 [...] of their circumstances or their ignorance/inexperience. It could be argued that a good bit of the subprime mortgage crisis is the result of predatory lending practices in one form or [...] [...] of their circumstances or their ignorance/inexperience. It could be argued that a good bit of the subprime mortgage crisis is the result of predatory lending practices in one form or [...]

]]> By: Marshall Brain http://blogs.howstuffworks.com/2007/11/28/how-the-subprime-mortgage-crisis-works/#comment-297 Marshall Brain Thu, 29 Nov 2007 05:51:13 +0000 http://brainstuff.howstuffworks.com/2007/11/28/how-the-subprime-mortgage-crisis-works/#comment-297 Wow. I am going to guess that both the mortgage company and the loan officer both made a lot of money in fees/commissions off that loan, which they rolled into mortgage so she didn't have to pay any fees at closing. So the mortgage company made its money instantly and irrevocably, even the the loan was doomed. And, because of the situation, they inflated the fees. How far off am I? Wow. I am going to guess that both the mortgage company and the loan officer both made a lot of money in fees/commissions off that loan, which they rolled into mortgage so she didn’t have to pay any fees at closing. So the mortgage company made its money instantly and irrevocably, even the the loan was doomed. And, because of the situation, they inflated the fees. How far off am I?

]]> By: Emodude http://blogs.howstuffworks.com/2007/11/28/how-the-subprime-mortgage-crisis-works/#comment-296 Emodude Thu, 29 Nov 2007 03:12:24 +0000 http://brainstuff.howstuffworks.com/2007/11/28/how-the-subprime-mortgage-crisis-works/#comment-296 OK, I had my wife crunch the numbers to justify the loan example you give. First, it’s important to note that 28% is a <i>guideline</i>, not a rule. And more importantly, you’ll notice in the mortgage information link you provide, 38% is the guideline used for total debt, so if this person had no other debt, now the lender can justify up to a 38% DTI (Debt to Income ratio). And in the heyday of all this, she’s says they would do loans up to 45% DTI, not to exceed 50%. Now your example. Get your <a href="http://www.yourmortgagecalculator.com" rel="nofollow">mortgage calculator</a> out. A $385,000 loan, over 30 years on a teaser rate of 1.25% (a very common rate back then) with no money down would give you a monthly payment of $1,283. 1283/2900*100= 44.24% DTI! My wife says her company would’ve given out this loan in a heartbeat. Scary, and of course ultimately doomed. Completely smacks of banks giving ridiculous loan amounts to internet start-up companies 7-8 years ago. You'd think they'd have learned their lesson the first time... OK, I had my wife crunch the numbers to justify the loan example you give.

First, it’s important to note that 28% is a guideline, not a rule. And more importantly, you’ll notice in the mortgage information link you provide, 38% is the guideline used for total debt, so if this person had no other debt, now the lender can justify up to a 38% DTI (Debt to Income ratio). And in the heyday of all this, she’s says they would do loans up to 45% DTI, not to exceed 50%.

Now your example. Get your mortgage calculator out. A $385,000 loan, over 30 years on a teaser rate of 1.25% (a very common rate back then) with no money down would give you a monthly payment of $1,283. 1283/2900*100= 44.24% DTI! My wife says her company would’ve given out this loan in a heartbeat.

Scary, and of course ultimately doomed.

Completely smacks of banks giving ridiculous loan amounts to internet start-up companies 7-8 years ago. You’d think they’d have learned their lesson the first time…

]]> By: Marshall Brain http://blogs.howstuffworks.com/2007/11/28/how-the-subprime-mortgage-crisis-works/#comment-295 Marshall Brain Wed, 28 Nov 2007 16:26:30 +0000 http://brainstuff.howstuffworks.com/2007/11/28/how-the-subprime-mortgage-crisis-works/#comment-295 Does your wife have any insight into how things like the 28% rule got broken? How could someone making $2,900 a month get a $385,000 loan? Does your wife have any insight into how things like the 28% rule got broken? How could someone making $2,900 a month get a $385,000 loan?

]]> By: Emodude http://blogs.howstuffworks.com/2007/11/28/how-the-subprime-mortgage-crisis-works/#comment-294 Emodude Wed, 28 Nov 2007 15:06:14 +0000 http://brainstuff.howstuffworks.com/2007/11/28/how-the-subprime-mortgage-crisis-works/#comment-294 My wife works for Countrywide, so I've gotten an up-close, first hand look at this entire crisis as it's being played out. 1-2 years ago loan consultants were living the good life with nice fat pockets, now they can't even keep their heads above the water. And it's only gonna get worse before it gets better. My wife works for Countrywide, so I’ve gotten an up-close, first hand look at this entire crisis as it’s being played out. 1-2 years ago loan consultants were living the good life with nice fat pockets, now they can’t even keep their heads above the water. And it’s only gonna get worse before it gets better.

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