Federal Bank Regulators Offer Guidelines For Exotic Mortgage Lending

RE:Federal Bank Regulators Offer Guidelines For Exotic Mortgage Lending

Ray — Mon, 23 Oct 2006 11:00:00 GMT

I live and own a house in California and the real estate prices have gone thru the roof. My mortgage broker and real estate agent said it is the payment option and interest only and inital teaser rate loans that allow people to bid up the prices. Move into areas they really cannot afford with a normal ARM or fixed loan. I am hoping these people lose their shirts. Eventhough my house is worth much more, it is not good for the economy.

RE:Federal Bank Regulators Offer Guidelines For Exotic Mortgage Lending

Glen — Sat, 07 Oct 2006 11:00:00 GMT

Option Arms were originally developed for borrowers whos income changes month to month, IE a comissioned sales person. They were not designed to put you in a home you cant afford by relying on a payment that adds to your principle each month!!! There are many unexperienced mortgage brokers who can not sell and do not understand the terrible effects these products have in the hands of the wrong borrowers. Legislature IS A MUST!

RE:Federal Bank Regulators Offer Guidelines For Exotic Mortgage Lending

Don Secunda, Esq. — Tue, 03 Oct 2006 11:00:00 GMT

They are talking about interest-only and option payment loans. as well as those low-pay-rate loans (pay rate is 1% but loan rate is 6% which creates a minimum of a 5% negative amortization at the end of the first year alone). These allow more people to buy, people to afford a higher price since the debt service is lower, and result in higher prices and more defaults/foreclosures. Eliminate these and there's a good shot prices will stabilize at a realistic level after some inventory increases.

RE:Federal Bank Regulators Offer Guidelines For Exotic Mortgage Lending

Mike — Tue, 03 Oct 2006 11:00:00 GMT

Hey Charise... arms and interest only arms are not what they are referring too. its those option arms, the ones where you have different payment options like a minimum payment, interest only, 15yr fixed and 30 yr fixed. if you just pay the bare minimum you run the risk, and in this market, do have negative amortization (where you principle loan amount increases every month). They are dangerous for 85% whom do have these loans, because they should never be in this loan to start with.

RE:Federal Bank Regulators Offer Guidelines For Exotic Mortgage Lending

CHARISE — Mon, 02 Oct 2006 11:00:00 GMT

How long will these products be around due to the potential risk?

RE:Federal Bank Regulators Offer Guidelines For Exotic Mortgage Lending

Anonymous — Mon, 02 Oct 2006 11:00:00 GMT

Does this affect predatory lending loans ?

RE:Federal Bank Regulators Offer Guidelines For Exotic Mortgage Lending

Jason Danner — Mon, 02 Oct 2006 11:00:00 GMT

I bought my first home at 27. I was convinced that fixed rates were the way to go. I'd live there forever. Now I am 40, on my 3rd home. After 13 years, I've paid down maybe 8 or 9K of prinicple....compare that to the equity ($200K) I have made. If you're young, my advice is to go with a 3 to 7 year ARM. Enjoy the extra savings. Just buy smart. Choose the best neighborhood you can afford and keep a close watch. When neighbors stop caring about their homes appearance.... get out fast.