Today’s Kansas City Star reports that the $295 million settlement with Ameriquest is about to begin taking hold and that consumers should start receiving their refunds in April. It seems they were taking advantage of people with their loan vehicles. The article even contains a link that describes in detail the settlement. If it affects you, it might be worth your time to read the links.
My own personal word about sub-prime loans is “caution”. I have had clients that have used them to their advantage. And I’ve had clients (who probably never even should have purchased a home) continue down the path of financial disaster with them. Seek sound financial counseling before deciding whether or not a “B” or “C” paper loan is the way to go for you.
Here is a great story of someone that used it to their advantage: I had some clients call and say they were two years out of bankruptcy, had $1,900 in cash and wanted to buy their own home. They readily admitted that their own financial stupidity is what caused the bankruptcy. For their family of four they were paying $925/mo for rent in a 3 bedroom apartment.
We talked about the positives and the negatives of what they were about to do and talked about the loan they would be taking on. It was a 100% loan and the interest they ended up paying was 8.7% with all closing costs paid by the Seller. After adding up principal and interest and taxes and insurance and working out their tax situation we discovered that their real dollars house payment was $963/mo. So yes, the interest was very high, but no they weren’t any worse off than they were renting. They had kept the style and price of the home very affordable.
Three years later and they have just refinanced their house and did it at 7.0%. The house had appreciated enough and they had paid down enough of the loan to end up with an 80% LTV.
There, my friends, is a great example of how sub prime loans can and should be used.
Today’s Kansas City Star reports that the $295 million settlement with Ameriquest is about to begin taking hold and that consumers should start receiving their refunds in April. It seems they were taking advantage of people with their loan vehicles. The article even contains a link that describes in detail the settlement. If it affects you, it might be worth your time to read the links.
BBQ Capital | Kansas City Real Estate Investing 
Hi Chris,
The subprime market is changing. We have been getting emails about the guidelines tightening up and we have seen more and more subprime lenders falling out.
Thanks for helping me get started with the blog/posting fun. I am really learning a lot and will help other realtors. It’s another way for us to provide value added service. I joined the KW group on Activerain.com too. Check out this post about KWLS. It’s interesting to read through all the comments.
Stacey
Great post – that story is especially solid.
On the subject of subprime loans, there’s a bunch of those with savvy investors as borrowers. I’ve had many of my clients apply and receive these type loans, and the interest was almost identical as a “full doc” loan. Also, the lenders I took them to wouldn’t lend to them with a FICO under 720.
The problem isn’t the loans, it’s the subprime borrowers. The ones with less than stellar credit scores who insist they’re the next bizzionaire investor.
Again – great post.
Stacey – thank you for the update on your blogging. Addictive is how it can become!
Jeff – Your opinion and comments are always welcome here! Thanks for visiting.