Isn’t this how the last real estate crisis happened? Offering credit to those who really didn’t have the necessary credit background to qualify? Here we go again. Sub-prime mortgage lending is back, baby! Wells Fargo Bank has announced it will now accept scores as low as 600, down from 640, for FHA and VA home loans. Government-backed loans for the sub-prime market. What could go wrong? These loans can put consumers into a home with a down payment as low as 3.5%. And, of course, the government will be on the hook for it if these mortgage deals don’t work out as planned.
With this move, other banks have taken notice, including Chase Bank and Bank of America. Apparently, this move was spurred by a decrease in home loan refinancing and the desire of the banks to extend more credit. Uh huh. That is code for “we need to make more money”. Some lessons never actually get “learned”. While there may be no education in the second kick of a mule, it can be quite rewarding if you aren’t the one on the receiving end of the mule’s kick.
Kevin Fallon McCarthy
Latest posts by Kevin Fallon McCarthy (see all)
- Different Ways to Get Out of Debt - January 22, 2019
- Public Servants’ Second Chance at Federal Student Loan Forgiveness - April 10, 2018
- CREDIT CARD LOSS FOR SMALL BANKS AT AN EIGHT YEAR HIGH - March 22, 2018
- Rise of the Jumbo Student Loans - March 17, 2018
- Credit Card Market: Now and Then - February 23, 2018