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Subprime Bailout

By
Mortgage and Lending with Franklin Loan Center

11/30/2007

Some initial reports are coming in through the media that there will be a sub prime bail out by banks.  As I hear more and more about this there is a huge void when it comes to details about who is going to be bailed out and who isn't.  The description of how they will differentiate borrowers is that every borrower who is in an adjustable sub prime loan will fit into one of three boxes 1) Borrowers who can make the payment after the adjustment 2) Borrowers who can't make the payment even before the adjustment and 3) Borrowers who can make the pre-adjusted payment but not the post-adjusted payment.  It is the borrowers who are in box 3 that will be "bailed out" with a sub prime "freeze." Supposedly it is the borrowers that can afford the teaser rate and not the adjusted rate that can have their loans frozen on the teaser rate.  I want to be very clear that this is just preliminary information and is not fact.  There is a huge controversy over this because it is unprecedented.  It could have some short term positive effects, but some major long term effects.  It also sends the wrong message to borrowers.  It may be indirectly assigning blame as the bailout candidates could be seen as victims.  It could be opening up a proverbial can of worms and where the intentions are good there are harmful reactions and repercussions

Matt Ratcliffe, REALTOR
Keller Williams Realty Brazos Valley - College Station, TX
It is a mess and now the international communities are bailing out banks out.  100% financing can it it ever be good?
Nov 30, 2007 07:07 AM