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 June 28, 2007

Subprime Loan Standards Give Lenders Cause for Lament
Lenders are saying that not all subprime loans are bad. Some lenders feel that new legislation threatens to keep many people from homeownership by not being able to qualify for a conventional loan.
The people who are most affected by the new subprime loan legislation are those with uneven income: construction workers, and self-employed professionals. Many of these individuals are wary of credit cards and tend to use cash for purchases. Many of these people have also used their own homes as collateral to open businesses, causing them to show a poor debt-to-income ratio when applying for a loan. Other affected individuals are those who are digging out financially from bankruptcy as a result of a divorce, medical crisis or layoff.

Dolly Amaya, a mortgage broker who specializes in loans to members of the Latino community feels that she now has fewer tools to help client's dreams become reality. She further sates that a lot of people are giving up on the idea of homeownership.

Kris Wilson, a loan officer affiliated with Summit Mortgage, states that the new legislation has caused "the baby to be thrown out with the bath water." Among the many- a few people were given loans that they shouldn't have gotten in the first place and now everyone is paying for it.

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