Why dont the Feds reduce the interest rates. And Cap the interest rates of people with bad credit.?

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The higher the rate the more likely people will lose there home, the more likely banks will close their doors and it is a domino reaction. If the Fed’s would come in and regulate the Mortgage Broker Industry completely STOP PRE-PAY PENALTIES and cap the Interest rates of people who have had some bad luck st 2 above A paper loans there would be a tremendous decrease in the Mortgage Industry today. Less Realtors, Bankers, Builders and General Contractors would that would lose everything because the market went from so GREAT to Major Banks closing there doors. I am a Mortgage Broker in NW Florida and I along with most everyone in this area is about to lose everything I have I can hardly buy grocewries and pay bills and keep a roof over me and my kids head it is almost as bad as another Hurricane atleast then there would be some help.

  1. Reply
    May 4, 2011 at 4:37 am

    The only people at risk are those who could not afford the houses they bought and were only able to get in because of poor lending practice. They got an adjustable rate mortgage with the full understanding that they would be facing a rate jump after the initial teaser rate ran out. That’s just plain stupidity. The businesses at risk are those who made risky loans. There is certainly no reason to bail them out; these are not the type of companies this country needs. It may sound cruel but you have to keep in mind that lowering rates also has an impact to the economy.

    Think of what happens when you lower rates.
    – It becomes more difficult to sell federal debt.
    -The USD would further weaken
    – Cost of goods rise…inflation.

    These problems will affect EVERYONE, not just the people who spent beyond their means.

    BTW, your scenario is unlikely as only a small percentage of the mortgages are those given to the unqualified. Not everybody is a CFC or WAMU. The “bubble” in certain areas of the country is not directly related to the credit squeeze and lowering rates would simply restart feeding the bubble.

  2. Reply
    May 4, 2011 at 5:10 am

    Thats because it would level the playing field, and make debt manageable. That’s not the way you make money. Give those with money and/or good credit loans at low or zero interest rates and make the poor/bad/no credit people nothing but make them pay huge interest so that they will owe you til eternity. That way when the people in set A go to set B you will still have their business.

    Now, in the matter of real estate, throw set B a subprime loan. Get their down payment money. They don’t realize that their monthly mortgage payments reflect their property taxes. The $ 800 a month mortgage payment is now $ 2000 a month. They can’t afford it, you foreclose and resell the house. Money on top of money.

    This type of economy is meant for us CAPITALIZE on one another, not help each other out. If the Feds did that, it wouldnt be capitalism.

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