Something interesting is happening in the United States right now. People are beginning to realize the need for private mortgages, especially homeowners and homebuyers that have poor credit – and investors are starting to cash in on that need. So much so that this type of investing has even gained a catchy new name across the border.
Everyone knows that it was largely the sub-prime mortgage market that caused the U.S.’ economy to come crashing down around them. Too many people with no credit or bad credit, without a job, or with too much debt, were given a mortgage that they simply couldn’t afford. Great for the housing market leading up to the crash, but the housing market collapse saw millions of people losing everything they owned – including that home that they couldn’t afford to begin with.
Since that collapse, President Obama and the other policymakers around Washington have been adamant that they would never let something like that happen again. Sub-prime mortgages were effectively off the market – just as they were here in Canada. If you wanted to buy a home, you had to have strong credentials backing you up.
But, that’s no longer the case any more. No, Frannie Mac isn’t handing out mortgages to anyone that comes looking for one. But private investors have stepped up and stepped in to fill a void that was leaving many out in the cold. They’re doing it by providing ‘sane sub-prime mortgages.’
‘Sane sub-prime’ or ‘smart sub-prime,’ as some investors and companies are calling them, are just that. They’re private mortgages that are set up to help homeowners and homebuyers come up with the money for a home, even though those individuals might have poor credit. In some cases the FICO scores looked at hover around 550 or 500 – scores that are really low. Often these companies will investigate as to why the credit score is so low and still approve mortgages for those with extenuating circumstances, such as divorce. Those that are just continuously late in paying their bills however, might not even be able to get a ‘sane’ sub-prime.
So the next time you want to invest your money, consider doing it with sane sub-prime mortgages. No we don’t officially call them here yet, but many happenings in America are only there exclusively for so long before they find their way over here, too.