If someone is a high risk for credit then why doesn't that person just get a higher interest fixed rate loan.
Then after paying his mortgage on time for a few years, he can most likely refinance to a lower fixed rate.
Why do subprime loans also have to be interest only or even negatively amortized as most of them seem to have been?
I’m not talking about interest only or negative amortization loans. I’m talking about a 30 year amortized adjustable loan with the fixed period of 1 to 5 years, depending on how long it might take to reestablish credit, with a 1 or 2 year prepayment period for a lower interest rate at a LTV of 75% or less. Many borrowers have taken advantage of these loans rather than sell or lose their homes because they didn’t qualify for a Frannie/Freddie refinance.