Comments on: Home loans with low down payments require PMI insurance, so why are banks losing money on sub-prime mortgages? http://governmentloangrants.com/articles/home-loans-with-low-down-payments-require-pmi-insurance-so-why-are-banks-losing-money-on-sub-prime-mortgages Sat, 20 Dec 2008 20:05:49 -0700 http://wordpress.org/?v=2.8.5 hourly 1 By: CINDY W http://governmentloangrants.com/articles/home-loans-with-low-down-payments-require-pmi-insurance-so-why-are-banks-losing-money-on-sub-prime-mortgages/comment-page-1#comment-2435 CINDY W Thu, 25 Sep 2008 20:18:50 +0000 http://governmentloangrants.com/articles/home-loans-with-low-down-payments-require-pmi-insurance-so-why-are-banks-losing-money-on-sub-prime-mortgages#comment-2435 There isn't any PMI on subprime loans, so the answer is NO. A few years ago when the subprime market was at it's peak, millions of these loans were underwritten and approved. They were typically 2/28 ARM loans and PMI insurance companies would not even insure these loans. The interest rates were high to start with, but fixed for 2 years. The plan was for the borrowers to clean their credit up before the 2 year period was up and then to refinance into a low fixed rate mortgage. Unfortunately, this didn't happen and borrowers who could barely afford the initial payment, certainly couldn't afford the increased payment when the adjustment took place. PMI insurance is for credit--worthy loans, not subprime loans. Banks are losing so much money on these loans because people can't afford the new and higher payments and are walking away from their homes. Foreclosure is at an all time high everywhere. There isn’t any PMI on subprime loans, so the answer is NO. A few years ago when the subprime market was at it’s peak, millions of these loans were underwritten and approved. They were typically 2/28 ARM loans and PMI insurance companies would not even insure these loans. The interest rates were high to start with, but fixed for 2 years. The plan was for the borrowers to clean their credit up before the 2 year period was up and then to refinance into a low fixed rate mortgage. Unfortunately, this didn’t happen and borrowers who could barely afford the initial payment, certainly couldn’t afford the increased payment when the adjustment took place.

PMI insurance is for credit–worthy loans, not subprime loans.
Banks are losing so much money on these loans because people can’t afford the new and higher payments and are walking away from their homes. Foreclosure is at an all time high everywhere.

]]> By: Lisa L http://governmentloangrants.com/articles/home-loans-with-low-down-payments-require-pmi-insurance-so-why-are-banks-losing-money-on-sub-prime-mortgages/comment-page-1#comment-2434 Lisa L Thu, 25 Sep 2008 10:29:15 +0000 http://governmentloangrants.com/articles/home-loans-with-low-down-payments-require-pmi-insurance-so-why-are-banks-losing-money-on-sub-prime-mortgages#comment-2434 Most sub prime loans don't have PMI. They put them in 80/20 loans, Interest only loans, adjustable loans that they couldn't afford when the first adjustment period happened, & other ridiculous loans with negative amortization. Those buyers wanted what they wanted when they wanted it & never looked beyond the first payment. Many of them are as guilty as the lenders. Most sub prime loans don’t have PMI. They put them in 80/20 loans, Interest only loans, adjustable loans that they couldn’t afford when the first adjustment period happened, & other ridiculous loans with negative amortization. Those buyers wanted what they wanted when they wanted it & never looked beyond the first payment. Many of them are as guilty as the lenders.

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