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Lenders scramble for loan buyersSince the 1970s, lenders have sold some of their loans to investment banks who later packaged them as mortgage securities and sold the securities worldwide.In the 1990s, some creative executives started to do the same thing with subprime loans, or mortgages to people with rocky credit profiles. The higher-paying securities backed by subprime loans took off, and they got rich. Things worked smoothly until last year, when subprime borrowers began defaulting on loans in high numbers. Then investors got nervous and so did the big investment banks that created the securites, including Morgan Stanley, Goldman Sachs, Credit Suisse and others. Those banks cut off funding to some of the more aggressive lenders, which in turn stopped buying loans from small lenders. At the time the spigot was turned off, some mortgage consolidators were planning to fund up to eight loans and sell them to the larger lender. The lenders hoped to find other buyers for some loans. Then customers were turned away because no one would agree to buy loans made to them. The result was that the loans were funded them with a short-term credit line. The hardest loans to fund these days are for amounts that total all, or nearly all, of the price of a home. Even borrowers with good or fair credit will have a harder time getting a loan if they don't make some kind of down payment, lenders say. click here for complete article Need to sell you home, condo or building lot? Visit 888SOLDin9 to talk with our Jacksonville FL 888soldin9 partner about your personal financial situation. Our Jacksonville FL partner, Jim Tallent buys, sells, renovates and rents homes and properties in Jacksonville FL, Duval County FL and Northeast Florida. |