Real Estate Blog - Yes to GETTING RID OF 2/28 ARM

Yes to GETTING RID OF 2/28 ARM

Active Rain I am hyped that all of the lenders today are getting rid of the 2/28, I have never really pushed this product in the first place because what can you really do in 2 years to get a better deal? Most of the time they don't get the value anymore, credit gets worst and everything just goes down the drain. I have called everyone I know to make sure they are not on an adjustable rate mortgage.

Does anyone really see a good side to a 2/28 mortgage?

Thanks so much!

Ben

Posted by Q Q on 08/03/2007 12:55 PM

Comments (11)

11 Comments on Yes to GETTING RID OF 2/28 ARM

AUG

2007

Im so glad I do mailers to 2/28 customers to get them off of those deals, cause most of the time they can't refinance till they fix there credit. Which really sucks cause you really want to help them

Ben

AUG

2007

Would you really complain about the 2/28 if it was a few years ago and rates were heading down instead of up?

Most people who got into these mainly subprime options did so because it was their best option for buying a home. They probably couldn't afford a 30 year fixed mortgage so they decided to go this route and bet on the future versus possibly staying as a renter.

Your credit bureau and its score can look drastically different in 2 years-good or bad. If the loan person put the customer into these loans because of credit issues then took the time to help them repair their credit (and assuming the client was even willing) then that person would have a slam dunk refinance opportunity, a good source for referrals, and a lifelong customer.

Actually, there is an excellent time to use a 2/28 ARM: When the credit is fine but recent self-employment pushes one into Alt-A (not there is much of that right now!). Another time to consider a 2/28 is when a collection or other significant derogatory is about to roll off and the customer wants to buy now.

Several factors can prevent one from a conventional loan and credit is just one of those factors. That said, I do agree that they have been entirely overused.

AUG

2007

Great Post Jefferson and Michael. I think you have a great mindset on what people really need.

The lenders made this product for sub prime borrowers. Most of your subprime lenders had a fixed rate adjustment of a full point to get the fixed. THATS $321 MORE A MONTH FOR EVERY 100K.

I am glad so the 2/28 arms go away, but sub prime seems to be going with it.

Benjamin, 2/28 was not the problem. This was a good product for some clients. You can't just make a blank statement about a product and say it is bad. A 2/28 was just in my eyes a band-aid loan. If you had some credit problems it gave you time to fix them and restore your credit. What happened in many cases was the client never did that.

I am realistic and understand many mortgage people never informed the borrowers of what they needed to do. I know many FULL-TIME Mortgage Professionals on A/R and I feel comfortable knowing that they did the right thing by the client. I know I informed my clients.

OCT

2007

Hang in there Benjamin - the pendulum will soon swing back...well, maybe not SOON, but it will.

I agree...Why not just bump it up to a 3 year ARM and call it a day.

:-)

There will always be a loan shark out there looking to lend someone money, and there will always be demand for that hard money.

I just wish that it weren't so...when someone does a 2/28, sirens and bells should go off signaling the need for the borrower to get a second opinion as well as a parent signature!

DEC

2007

Benjamin. thanks for joining Rain Bay http://activerain.com/groups/selljunk How is the Kentucky group going?

DEC

2007

Interesting stuff. We're starting to see some of the fallout from these (especially those that never fixed their problem) around here. Bummer.

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