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The risky mortgage is making a comeback.
More than a decade after home loans triggered the worst financial crisis in a generation, the strict lending requirements put in place during its aftermath are starting to erode. Home buyers with low credit scores or high debt levels as well as those lacking traditional employment are finding it easier to get credit.
The article goes on to state the following:
The loans have been rebranded. Largely gone are the monikers subprime and Alt-A, a type of mortgage that earned the nickname “liar loan” because so many borrowers faked their income and assets. Now they are called non-qualified, or non-QM, because they don’t comply with postcrisis standards set by the Consumer Financial Protection Bureau for preventing borrowers from getting loans they can’t afford.
Borrowers took out $45 billion of these unconventional loans in 2018, the most in a decade, and origination is on track to rise again in 2019, according to Inside Mortgage Finance, an industry research group. Such mortgages aren’t guaranteed by government agencies and typically charge higher interest rates than conventional loans.
Oh, so this is happening again…
What financial crisis? Home buyers with low credit scores or high debt levels are finding a more receptive mortgage market https://t.co/MSx0A5QXM7
— Eric Soufer (@EricSoufer) August 21, 2019
Although not rising to the same level as they did prior to the #HousingCrisis, there are some weakening standards and practices taking place, warns Milken Institute Housing Program Director @KapsHouse. https://t.co/OmI42mG83h
— Milken Institute (@MilkenInstitute) August 21, 2019
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