Are today's Non Prime loans just Subprime loans in disguise or are they really different? That's a legitimate question and real concern. Both programs offer loans to people who can't get a prime loan typically due to marginal or bad credit. Both programs charge higher interest rates than prime loans. They certainly look the same. However, the most prominent aspect differentiating Non Prime from Subprime is the
Proponents of Non Prime lending reference the thousands of potential homebuyers that have been locked out of home buying due to past credit issues. These buyers are precluded from purchasing a home even though they have a hefty down payment and stable income which allows them to afford the monthly payment. Unlike the past, today these borrowers must ante up a substantial down payment - typically 30% and provide copious documentation proving they have income to meet their mortgage obligations. The documentation may be onerous and the process difficult but borrowers will have the opportunity to purchase a home they couldn't obtain with a Conventional, FHA or VA mortgage.
Currently, there is also not much interest from investors to buy securities backed by Non Prime loans. Many investors got seriously burned by Subprime securities during the Financial Crisis and their wounds are still healing. Until investors show more interest, bundling of these loans into securities is not yet viable. This will limit the amount of funds available for Non Prime loans and lending will remain limited to select lenders. Non Prime lenders can be found at http://www.MortgageElements.com. Mortgage Elements maintains one of the largest databases of Wholesale and Correspondent lenders. Mortgage Elements database can be accessed for free by mortgage professionals to find lenders and research their loan programs. As you can expect, many mortgage professionals and regulators are carefully watching this sector as it slowly develops.
Read the full story at http://www.prweb.com/releases/2014/02/prweb11622979.htm
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