Subprime Mortgage Companies Violated Own Guidelines
(EMAILWIRE.COM, May 03, 2007 ) SACRAMENTO – Subprime mortgage lending companies helped fuel the record surge in home loan defaults because they were too focused on getting a share of new mortgage loan business in recent years according to industry analysts.
Engaging in a practice known as “exceptions” was a common pattern among lenders according to Michael Youngblood, an executive at FBR Investment Management Inc. Mr. Youngblood made his comments recently at an Information Management Network conference in Miami, FL.
Youngblood added, “the amount of loan exceptions made in 2006 must be historically the highest.” Late payments on mortgages rose as high as 11.4 percent. Part of the problem, he added, was that lenders used insufficient data to gauge the creditworthiness of borrowers.
Another panelist, Mark Milner, a risk officer for PMI Mortgage Insurance Company, said that his company chose not to insure many of the subprime mortgages originated recently because of faulty underwriting standards. His company’s skepticism proved to be prescient as much of the country is struggling to regain footing in the single family home market amidst a tidal wave of foreclosure activity.
Foreclosure expert Patrick McGilvray, J.D., CFP®, President of TheHomeBuyingCenter.com had this to say about the underwriting standards, “clearly, many of the subprime lenders got greedy and disregarded their own policies and common sense. The sad thing is that many people, especially first-time homebuyers, were sold inappropriate products by lenders and their representatives and independent brokers who cared only about short-term gains.”
Despite the fact that many bonds were sold to investors that were backed by subprime mortgages some analysts do not foresee serious damages to the value of these bonds. "I don't think the problems will be as widespread as some of the forecasts out there" commented Allan Berliant, portfolio manager with Grantham, Mayo, Van Otterloo & Co.
Mr. Youngblood forecasted a 5 to 7 percent drop in values of the bonds back by subprime mortgages issued in recent years.
Contact:
TheHomeBuyingCenter.com
Patrick McGilvray, J.D.
1-888-444-BUYER
http://www.TheHomeBuyingCenter.com
###
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Engaging in a practice known as “exceptions” was a common pattern among lenders according to Michael Youngblood, an executive at FBR Investment Management Inc. Mr. Youngblood made his comments recently at an Information Management Network conference in Miami, FL.
Youngblood added, “the amount of loan exceptions made in 2006 must be historically the highest.” Late payments on mortgages rose as high as 11.4 percent. Part of the problem, he added, was that lenders used insufficient data to gauge the creditworthiness of borrowers.
Another panelist, Mark Milner, a risk officer for PMI Mortgage Insurance Company, said that his company chose not to insure many of the subprime mortgages originated recently because of faulty underwriting standards. His company’s skepticism proved to be prescient as much of the country is struggling to regain footing in the single family home market amidst a tidal wave of foreclosure activity.
Foreclosure expert Patrick McGilvray, J.D., CFP®, President of TheHomeBuyingCenter.com had this to say about the underwriting standards, “clearly, many of the subprime lenders got greedy and disregarded their own policies and common sense. The sad thing is that many people, especially first-time homebuyers, were sold inappropriate products by lenders and their representatives and independent brokers who cared only about short-term gains.”
Despite the fact that many bonds were sold to investors that were backed by subprime mortgages some analysts do not foresee serious damages to the value of these bonds. "I don't think the problems will be as widespread as some of the forecasts out there" commented Allan Berliant, portfolio manager with Grantham, Mayo, Van Otterloo & Co.
Mr. Youngblood forecasted a 5 to 7 percent drop in values of the bonds back by subprime mortgages issued in recent years.
Contact:
TheHomeBuyingCenter.com
Patrick McGilvray, J.D.
1-888-444-BUYER
http://www.TheHomeBuyingCenter.com
###
This press release was issued through GroupWeb EmailWire.Com. For more information on press release distribution, go to http://www.emailwire.com.
Contact Information:
Patrick McGilvray, J.D.
Patrick McGilvray, J.D.
Tel:
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Patrick McGilvray, J.D.
Patrick McGilvray, J.D.
Tel:
Email us
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