Subprime Loans Explained

Subprime home loans are designed for people with below average, or below prime, credit scores. Usually subprime home loan mortgages have higher interest rates, and sometimes much higher interest rates, than prime loans. Subprime loans were designed for the "riskiest" type of homeowners - those with bad credit - because studies showed that people with bad credit were more likely to default and have their home foreclosed upon.

Subprime Home Loans: Difficult To Repay

High interest rates make a subprime mortgage more difficult for homeowners to repay their mortgages, and as a result, many homeowners with subprime loans fall behind on their payments and face foreclosure.

Predatory Lending And Subprime Loans

Many times, however, a homeowner was forced into a subprime home equity loan when they would have qualified for a better interest rate. Mortgage companies and mortgage brokers have been known to take advantage of minorities, unsophisticated and uneducated individuals by pushing them into these high interest rate loans.

In fact, some banks even paid cash commissions and incentives to brokers to encourage them to push these subprime loans as well as refinancing subprime loans.

Subprime Loans Instead Of Prime Loans!

The Wall Street Journal reported in 2006 that 61 percent of all borrowers receiving subprime mortgages had credit scores high enough to qualify for prime conventional loans! That means mortgage companies forced more than half of subprime borrowers into mortgage loans with higher interest rates than they otherwise qualified for!

Certain types of predatory lending may be illegal. For additional information about predatory lending, click here.

Get The Facts - Call Today For A Free Consultation

If you are facing foreclosure, or if you have been served with foreclosure papers, the Byrne Law Group can help. Talk to an experienced attorney at the Byrne Law Group right now, for FREE, to get the facts and learn about your options. Don’t face foreclosure alone - affordable attorney representation is a phone call away! Call the experienced attorneys at the Byrne Law Group today at 813-413-6565.