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Real Estate


Tom Kelly
Tom Kelly
The Real Estate Adviser
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April 5, 2007

The Real Estate Adviser: Let's not hammer all the subprime lenders

By TOM KELLY
Special to the Journal

Subprime lenders are getting hammered for the current state of the housing market, but let's remember that most of them are decent people ­— with creative programs — that filled a needed niche. Of the thousands of subprime loans in this country, about 13 percent are in trouble.

The subprime market's reputation has been damaged by unscrupulous lenders who have taken advantage of borrowers unfamiliar with the mortgage process. They have not given enough time to explain the “worst case scenario” payments and timeframes. Often, these borrowers qualified for better rates and fees than they actually received but simply did not understand what they were signing. Bait-and-switch stories often surface, and language challenges for immigrants are common. Consumers also have played a major roll in the mess, by not asking enough questions or accepting loan terms they know would put them over the edge.


 
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