Minority and low-income Americans mostly prefer adjustable-rate mortgages, even though they are vulnerable to losing their homes if interest rates rise, according to a survey conducted by the Consumer Federation of America."The 25% of Americans who say they prefer ARMs are younger, poorer, and less well-educated than those who prefer fixed-rate mortgages," the CFA said. "Fixed-rate mortgages are preferred by 76% of those with incomes over $75,000, by 70% of college graduates, and by 75% of those between the ages of 45 and 64." CFA executive director Stephen Brobeck said lenders "who aggressively market ARMs to lower-income consumers and those with low credit scores are acting irresponsibly. Given the high probability of interest rate increases, an adjustable-rate loan made to a family which can barely afford the initial monthly payments represents a ticking time bomb." The CFA urges lenders and consumers to use caution when marketing and purchasing ARMs. "In a rising interest rate environment, investors should be particularly leery of purchasing subprime adjustable-rate mortgages," said Mr. Brobeck. "These high-priced ARMs have the potential to harm investors as well as borrowers."
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Ohio-based Liberty Home Mortgage joins several companies who started using a more modernized FICO credit score for nonconforming mortgage originations recently.
11h ago -
The CFPB has dissolved the Office of Supervision, Enforcement and Fair Lending and eliminated the job of associate director in a move that impacts how it designates nonbanks for supervision.
April 17 -
The plan that the Federal Housing Finance Agency floated calls for Freddie Mac to actively invest in some new closed-end seconds as cash-out refinancing subsides.
April 17 -
The push comes amid what one expert highlighted as lax funding efforts for two Department of Housing and Urban Development grant programs.
April 17 -
Conventional lending drove volumes higher, particularly in the purchase market, the Mortgage Bankers Association said.
April 17 -
Net charge-offs at the Charlotte, North Carolina-based bank increased by more than 80% in the first quarter compared with a year earlier. BofA executives say that the rising losses were in line with the bank's risk appetite.
April 16