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Paul Kiesel
Paul Kiesel
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90% of Subprime Loans Belong to Exisiting Homeowners

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A commonly held misperception is the idea that homeowners who hold subprime mortgages were first-time buyers. In a Los Angeles Times report experts acknowledge that as many as 90% of all subprime loans are held by borrowers who were refinancing existing loans and NOT first-time buyers. Additionally, the banks would lead us to believe that the majority of “problem” loans are held by real estate speculators and not every day consumers. The truth is, painfully, the majority of troubled loans are held by average every day citizens who did not understand the true cost, terms and conditions of the loans that were sold. It was not so much, though it was certainly a part, of a failure to have regulations as much as it was the failure to ENFORCE existing regulations. Had homeowners been told when they were refinancing from, in many cases, fully amortizing low fixed interest rate loans, that the products they were purchasing were time bombs set to go off within three to five years the majority of these borrowers would have steered well clear. Unfortunately, rather than disclose the negative amortization of the teaser payment plan homeowners were gleefully pulling equity out of their homes without fully digesting the impact of the adjustable mortgage rate features of their loans. Many, if not all, of the borrowers represented by Kiesel Boucher & Larson and the consortium of firms throughout the country, owned their homes and were refinancing their primary residences. Unless relief is provided soon tens of thousands if not more of these homeowners will find themselves truly homeless. While Washington is debating homeowners are losing their most valuable asset.