ALT A FORCLOSURE WAVE WILL BE WORSE THAN SUBPRIME BROUGHT TO YOU BY DAVID CHAMBLESS & UNITED HOME MORTGAGE CENTER

By
Mortgage and Lending with United Home Mortgage Center
Just when it seemed that the onslaught of subprime loans was about ready to peak, there is a second wave that will dwarf the first by a large margin. The second wave will consist of Alternative-A loans, mortgages made to people with good credit, but without proof of income. Why is the second wave so far behind the first? The answer is very simple, Alt-A loans have a 5 to 7 year grace period before before payments to principal is required. Subprime borrowers, however, had to begin paying money to principal after only 2 or 3 years. This is why there will be such a large lag time between the two devastating waves. With the lethal combination of unemployment at a four-year high, banks having tighter standards for home loans and borrowers with negative equity in their homes, we will experience a much larger number of foreclosures in the second wave than what we did in the first. When thousands of borrowers with good credit see their mortgages double in coming months coupled with mortgages exceeding the value of their homes, we should not be surprised when they stop making payments. Just when we thought subprime borrowers with bad credit had taken the economy for a wild ride, we better further tighten our seat belts for for a far scarier ride with Alt-A borrowers who had good credit. It's not going to be pretty. http://www.nytimes.com/2008/08/04/bu...er&oref=slogin

Comments (0)