Lending Standards Fall At FHA
This blog has long maintained that the lowering of lending standards is a desperate attempt to stave off a correction. Case in point; the FHA is aggressively going after the subprime market. "Secretary Alphonso Jackson has a request for potential first-time home buyers, especially those with limited or imperfect credit histories: When you shop for a home this spring or summer, take a hard look at the new, consumer-friendly breed of FHA mortgages now rolling into the marketplace."
The packages are crazy, of course, as the money guys push more cash at borrowers. Still, a few downsides to subprime loans are mentioned.
"Be wary of the higher rates, fees and penalties that often come with loans in the subprime market..Some subprime servicers have little or no financial or legal incentives to step in and work with delinquent borrowers..Subprime loans often impose heavy early-payoff fees."