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In Home Loans, Subprime Fades As A Dirty Word

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http://www.nytimes.com/2014/06/29/business/in-home-loans-subprime-fades-as-a-dirty-word.html?ref=business&_r=0

Martin and Cindy Arroyo knew they were not ideal candidates for a home loan.

She had gone through a foreclosure after losing her job, and he was finishing his M.B.A. and had not yet found his current position. But they had managed to put together a down payment of more than $550,000, or three-quarters of the asking price for a four-bedroom house in Los Gatos, and thought they would find a bank willing to lend the rest. They didn’t.

So the Arroyos found an alternative: a subprime mortgage.

Despite the notoriety that subprime loans gained as a prime cause of the financial crisis, they are re-emerging, under much more careful control, as one answer to the tight lending standards that have shut out millions of would-be homeowners.

“We call it the sane subprime,” said Brian O’Shaughnessy, chief executive of the Athas Capital Group, which gave the Arroyos their loan.

Subprime loans, which accounted for about 15 percent of all new home loans in 2005 and 2006, are now a tiny sliver of the mortgage market. Only a handful of lenders are offering them, at interest rates from 8 to 13 percent (compared with about 4 percent for conventional loans to highly rated borrowers).

Not sure this is really subprime if you have got $550k!!!! as a deposit.

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http://www.nytimes.com/2014/06/29/business/in-home-loans-subprime-fades-as-a-dirty-word.html?ref=business&_r=0

Not sure this is really subprime if you have got $550k!!!! as a deposit.

Its not. They had 75% of the price as a deposit. That is not a subprime loan! This article is a load of b******s!

Edited by renting til I die

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