Subprime mortgages were the big bad wolves of the housing crash, but could they be the answer to our mortgage lending blues?
It’s no mystery that mortgage lending in today’s housing market is the strictest it’s been since the 1990s, with banks seeking to avoid even the slightest semblance of defaults after the horror days of the housing crash.
Indeed, lending has been so tight that, according to Laurie S. Goodman of the Urban Institute, lenders would have granted 1.2 million additional loans in 2012 alone had they adhered to the lending standards of 2001.
As Binyamin Appelbaum wrote in a recent article for The New York Times, “As a result, fewer young people are now buying first homes, fewer older people are moving up and less money is changing hands. Instead of driving the economic recovery, the housing business is dragging behind.”
Appelbaum, though, has an unorthodox solution in mind for today’s lending environment – revive the subprime loan.
Are Subprime Loans Back From the Dead?
It’s easy to forget – considering that they were the grand bogeyman of the housing downturn – that subprime loans were once touted as a solution to what Appelbaum described as “the excessive caution” of prime lenders. Through offering mortgages that were tailored to the economic conditions of the borrower (being less likely to pay, for instance, would generate a higher interest rate), subprime mortgages made home financing possible for scores of minorities, immigrants and other consumers who, in Appelbaum’s words, “did not conform to the mortgage industry’s traditional expectations.” And indeed, before the housing downturn, the vast majority of subprime borrowers paid their mortgages in a timely manner.
Yet, subprime loans have their critics, and their points are all valid. One argument charges that subprime loans merely maintain the status quo – by offering lower income borrowers a less sexy loan, we’re simply institutionalizing their lower status, rather than working on improving economic opportunity or, more importantly, loosening barriers to new home construction, which could lower home prices in pricey communities. And of course, subprime mortgages were hotbeds for fraud during the boom years.
A Radical Solution to Home Financing
Subprime loans are still around, but they’re now subject to the same strict underwriting standards that lenders bring to all transactions, so it’s unlikely that we’ll see a return of NINA loans – the “no income, no assets loans” that sunk housing in 2008.
But beyond subprime, some experts argue that lending requires real, systemic change to truly reform beyond the bubble years, and Appelbaum’s article highlighted two bold solutions:
- Reforming the nation’s bankruptcy laws so that, should consumers go before a bankruptcy court, judges would be allowed to reduce the burden of mortgage debt on the spot. Allowing judges that power, experts argue, would keep banks in check.
- An even bolder suggestion comes courtesy of Amir Sufi, an economist at the University of Chicago, and Atif Mian, an economist at Princeton, who argue that mortgage payments should automatically adjust to housing downturns, so that when home prices in an area fall, so will the mortgage holder’s payments; if the price of the home eventually rises, they argue, lenders would get a share of the home’s profits.
It’s unlikely either idea will gain much traction anytime soon, but it goes to show that the ghosts of housing finance continue to haunt the economy, if only in a more subtle way.
I simply want to tell you that I am just very new to blogging and site-building and honestly enjoyed this page. More than likely I’m going to bookmark your website . You actually come with great writings. Kudos for revealing your webpage.
You made a number of good points there. I did a search on the theme and found nearly all persons will agree with your blog.
Superb blog! Do you have any tips for aspiring writers? I’m planning to start my own website soon but I’m a little lost on everything. Would you recommend starting with a free platform like WordPress or go for a paid option? There are so many options out there that I’m completely overwhelmed .. Any recommendations? Thanks!|
Wow! This could be one particular of the most useful blogs We’ve ever arrive across on this subject. Actually Fantastic. I’m also a specialist in this topic therefore I can understand your effort.
I have learn several excellent stuff here. Certainly value bookmarking for revisiting. I wonder how a lot effort you set to make this kind of fantastic informative web site.
Admiring the time and effort you put into your site and in depth information you offer. It’s great to come across a blog every once in a while that isn’t the same outdated rehashed information. Wonderful read! I’ve saved your site and I’m including your RSS feeds to my Google account.
I¡¦ve been exploring for a little bit for any high-quality articles or weblog posts on this kind of area . Exploring in Yahoo I ultimately stumbled upon this site. Studying this information So i am satisfied to convey that I’ve a very just right uncanny feeling I discovered just what I needed. I such a lot indisputably will make certain to don¡¦t forget this site and provides it a glance regularly.
I really appreciate this post. I¡¦ve been looking all over for this! Thank goodness I found it on Bing. You’ve made my day! Thanks again
We’re a group of volunteers and starting a new scheme in our community. Your website offered us with valuable information to work on. You’ve done an impressive job and our entire community will be thankful to you.
Good write-up, I¡¦m normal visitor of one¡¦s site, maintain up the excellent operate, and It’s going to be a regular visitor for a long time.
I savour, result in I discovered just what I was having a look for. You have ended my four day long hunt! God Bless you man. Have a nice day. Bye
Usually I don’t read post on blogs, but I wish to say that this write-up very pressured me to try and do it! Your writing style has been surprised me. Thanks, quite great article.
Undeniably believe that which you said. Your favorite reason seemed to be on the net the easiest thing to be aware of. I say to you, I definitely get irked while people think about worries that they plainly don’t know about. You managed to hit the nail upon the top as well as defined out the whole thing without having side-effects , people could take a signal. Will probably be back to get more. Thanks
It’s the best time to make some plans for the future and it is time to be happy. I have read this post and if I could I desire to suggest you some interesting things or tips. Perhaps you could write next articles referring to this article. I desire to read even more things about it!
I intended to compose you one tiny note to thank you again with your great principles you have contributed in this article. It was really generous with you in giving without restraint what exactly a lot of folks would’ve made available as an e book to end up making some profit on their own, notably since you might well have tried it if you considered necessary. These guidelines additionally served like a good way to know that other people have similar dream just like mine to realize great deal more with reference to this problem. I am certain there are millions of more enjoyable opportunities in the future for individuals that view your blog post.
You actually make it seem really easy along with your presentation but I to find this topic to be really something that I believe I would by no means understand. It sort of feels too complex and extremely broad for me. I am looking forward to your next publish, I will attempt to get the hold of it!
I haven¡¦t checked in here for a while as I thought it was getting boring, but the last few posts are great quality so I guess I¡¦ll add you back to my daily bloglist. You deserve it my friend 🙂
I am constantly looking online for articles that can facilitate me. Thx!
I do not even know how I ended up here, but I thought this post was good. I do not know who you are but definitely you’re going to a famous blogger if you aren’t already 😉 Cheers!
I have been examinating out a few of your stories and i can claim pretty clever stuff. I will make sure to bookmark your website.
hello there and thank you for your information – I’ve certainly picked up anything new from right here. I did however expertise a few technical points using this website, as I experienced to reload the site lots of times previous to I could get it to load correctly. I had been wondering if your web host is OK? Not that I’m complaining, but sluggish loading instances times will often affect your placement in google and can damage your high-quality score if advertising and marketing with Adwords. Well I am adding this RSS to my e-mail and can look out for a lot more of your respective interesting content. Ensure that you update this again soon..
Wow! Thank you! I continuously wanted to write on my site something like that. Can I take a portion of your post to my blog?
Hello, i think that i saw you visited my blog thus i came to “return the favor”.I am attempting to find things to enhance my site!I suppose its ok to use some of your ideas!!
Hiya, I’m really glad I’ve found this info. Today bloggers publish just about gossips and net and this is really irritating. A good site with exciting content, this is what I need. Thank you for keeping this site, I’ll be visiting it. Do you do newsletters? Can’t find it.
Wow! This can be one particular of the most beneficial blogs We have ever arrive across on this subject. Actually Magnificent. I’m also a specialist in this topic therefore I can understand your effort.
I would like to thnkx for the efforts you have put in writing this site. I am hoping the same high-grade site post from you in the upcoming as well. Actually your creative writing abilities has inspired me to get my own site now. Actually the blogging is spreading its wings quickly. Your write up is a great example of it.
You are a very bright individual!
I¡¦ve read a few just right stuff here. Certainly worth bookmarking for revisiting. I surprise how a lot attempt you place to create the sort of great informative site.
Hello there, I found your site by way of Google at the same time as searching for a similar subject, your web site came up, it looks great. I have bookmarked it in my google bookmarks.
I’m not sure where you are getting your info, but good topic. I needs to spend some time learning more or understanding more. Thanks for excellent information I was looking for this info for my mission.
Well I definitely enjoyed studying it. This article provided by you is very useful for proper planning.
I have been browsing online more than three hours today, yet I never found any interesting article like yours. It’s pretty worth enough for me. Personally, if all site owners and bloggers made good content as you did, the web will be much more useful than ever before.
I wish to show my thanks to the writer for rescuing me from this type of situation. As a result of researching throughout the world wide web and finding ways that were not pleasant, I was thinking my entire life was well over. Living minus the strategies to the issues you have fixed through your good site is a crucial case, as well as the ones that might have negatively affected my career if I hadn’t come across your site. Your main expertise and kindness in taking care of all the details was crucial. I don’t know what I would’ve done if I had not discovered such a subject like this. I can at this moment relish my future. Thank you very much for your high quality and effective guide. I will not think twice to recommend the sites to anybody who ought to have support about this situation.
whoah this weblog is wonderful i love studying your articles. Keep up the great paintings! You understand, lots of people are looking round for this info, you could help them greatly.
I like the valuable information you provide in your articles. I will bookmark your weblog and check again here frequently. I’m quite sure I will learn many new stuff right here! Good luck for the next!
Awsome site! I am loving it!! Will be back later to read some more. I am taking your feeds also
I am extremely impressed with your writing skills as well as with the layout on your blog. Is this a paid theme or did you modify it yourself? Anyway keep up the excellent quality writing, it is rare to see a great blog like this one today..
Good website! I truly love how it is easy on my eyes and the data are well written. I am wondering how I might be notified when a new post has been made. I have subscribed to your feed which must do the trick! Have a great day!
I do believe all of the concepts you have introduced on your post. They’re really convincing and will definitely work. Still, the posts are too quick for beginners. Could you please prolong them a little from next time? Thank you for the post.
Wow, superb blog format! How long have you been blogging for? you make blogging look easy. The total glance of your web site is great, let alone the content!
Thanks for each of your labor on this website. My mum loves carrying out investigation and it’s really obvious why. Most of us learn all of the lively ways you present good strategies on your web site and increase contribution from other individuals on this issue then our favorite child is actually learning a lot. Take pleasure in the rest of the year. You’re the one doing a pretty cool job.
You actually make it appear really easy along with your presentation but I to find this topic to be actually something which I feel I would never understand. It kind of feels too complex and extremely vast for me. I’m looking forward for your next submit, I¡¦ll try to get the cling of it!
Hiya, I am really glad I have found this info. Today bloggers publish only about gossips and web and this is really irritating. A good web site with exciting content, that’s what I need. Thanks for keeping this site, I’ll be visiting it. Do you do newsletters? Can not find it.
I do believe all the ideas you have introduced for your post. They’re very convincing and will certainly work. Still, the posts are very short for novices. Could you please prolong them a little from next time? Thank you for the post.
I think this is among the most important info for me. And i’m glad reading your article. But want to remark on few general things, The site style is perfect, the articles is really nice : D. Good job, cheers
Great blog here! Also your web site loads up very fast! What web host are you using? Can I get your affiliate link to your host? I wish my site loaded up as quickly as yours lol
that’s good, thanks for sharing,.. I think this is great blog
that’s good, thanks for sharing,.. I think this is great blog
that’s good, thanks for sharing,.. I think this is great blog
I precisely wished to appreciate you once again. I’m not certain the things that I might have undertaken without the thoughts shown by you about my topic. It absolutely was an absolute frustrating dilemma for me personally, however , discovering your expert form you solved that made me to weep for happiness. I will be grateful for the assistance and even sincerely hope you are aware of a great job that you are putting in educating other individuals all through your blog post. Most probably you have never got to know all of us.
that’s good, thanks for sharing,.. I think this is great blog
Good ¡V I should definitely pronounce, impressed with your website. I had no trouble navigating through all tabs as well as related info ended up being truly simple to do to access. I recently found what I hoped for before you know it in the least. Reasonably unusual. Is likely to appreciate it for those who add forums or anything, website theme . a tones way for your customer to communicate. Nice task..
that’s good, thanks for sharing,.. I think this is great blog
Wow, marvelous blog format! How lengthy have you ever been blogging for? you make running a blog look easy. The overall look of your site is great, as well as the content material!
that’s good, thanks for sharing,.. I think this is great blog
that’s good, thanks for sharing,.. I think this is great blog