0% Teaser Rates And "Home Possible"
Its is obvious that the mortgage industry has thrown all caution to the wind and are making loans to anyone with a heart beat. This is now occurring under the guise of helping lower income people get into a home. My view has been they are helping people get into a home they can't afford and that is probably overvalued.
So I guess it was inevitable that with easy credit being offered by the central bank, some lenders would turn to 0% teaser loans. Here is an example: "Taking a page from credit-card companies and car makers, mortgage lenders are touting loans with rock-bottom introductory rates -- in one case, nearly 0%... the low introductory rate can last for as little as one to three months, after which the rate typically jumps above 4% or more. Plus, rates on these loans adjust frequently, meaning borrowers could see their costs rise as short-term interest rates increase".
In other words, yet another trap that could spring if rates rise or prices fall. Freddie Mac is especially eager to help the downtrodden; "Home Possible Mortgages – a new suite of low downpayment mortgage products with flexible credit underwriting standards that is expected to help thousands of families with savings issues or imperfect credit become homeowners".