Subprime Lenders Definition and guide to find

What is Subprime Lenders :

A sub-prime lender is one who lends to borrowers who do not qualify for loans from mainstream lenders. Some are independent, but increasingly they are affiliates of mainstream lenders operating under different names.

Sub-prime lenders seldom if ever identify themselves as such. The only clear giveaway is their prices, which are uniformly higher than those quoted by mainstream lenders. You do want to avoid them if you can qualify for mainstream financing, and I’ll indicate how shortly.

There are lenders who offer both prime and sub-prime loans, and one of them is referred to below. For borrowers who aren't sure where they stand, dealing with a lender who offers both has a distinct advantage. They will try to qualify you for prime and only if that fails will they drop you to subprime. Lenders who are strictly subprime might refer a prime borrower to an affiliated prime lender, but their financial interest dictates otherwise.


How to find a subprime mortgage lender?

If you have a bad credit history, you will probably be fed up with dealing with financial institutions. Trying to find a subprime mortgage lender may seem like too much hassle. In fact, if you need a mortgage to buy your first property, or to move up the property ladder, you will need a mortgage and if you have adverse credit a subprime mortgage lender is your best option.

Many subprime mortgage lenders are specialist companies, which may mean that you won't have heard of them - they can't afford the level of advertising that high street banks and building societies undertake. So how can you tell the reputable lenders from the not-so-reputable?

The best way to find a good subprime mortgage lender is to enlist the help of a mortgage broker. Whilst not all mortgage brokers have the necessary expertise in the subprime market, many do and so it's worth talking to some of your local brokers to see if they can help. Those with experience will know the majority of products in the market and will already have a relationship with the provider. This means that they can tell you which lenders to avoid and which have a product that will work for you.

Mortgage Loan and home loan credit

What is Morgage Loan? Why US got in Crisis because of Mortgage Loan?

A mortgage loan is a loan secured by real property through the use of a mortgage (a legal instrument). However, the word mortgage alone, in everyday usage, is most often used to mean mortgage loan.

Mortgage refinancing and second mortgages have become popular as the market tightens and interest rates become volatile. As you search the real estate market and decide on a new home, make sure to become educated on the mortgage process by working closely with a mortgage broker.

Not all mortgage loans are created alike. There are many variations among mortgage loans, meaning that some will be perfect for your situation, and others will be completely inappropriate. You need to understand mortgage loans and do the necessary research to be sure that you get the best financing deal possible.

The type of mortgage loan that you choose will determine how much you need to put up as a down payment, how much you’ll pay in interest, and for how long you’ll be making monthly payments. Likewise, the type of lender that you choose will significantly affect the terms and conditions that are available to you. The choice of lender can even influence how much you have to pay in closing costs for your home’s sale.

Subprime loans: These mortgage loans are available to borrowers whose low income, credit rating or both disqualifies them from government loans (i.e. VA and FHA loans) and traditional loans. Subprime loans usually impose a higher interest rate and down payment due to the increased risk involved in lending to individuals with a tarnished credit history.

Mortgage Loans Credit Rates Calculator are the things related to Mortgage loansc

Goldman Sachs, Morgan Stanley To Be Bank Holding Companies

The Goldman Sachs Group, Inc., or simply Goldman Sachs (NYSE: GS), is a large global bank holding company that engages in investment banking, securities and investment management. Goldman Sachs was founded in 1869, and is headquartered in the Lower Manhattan area of New York City at 85 Broad Street. Goldman Sachs has offices in all major world financial centers.

The Federal Reserve said Sunday it had granted a request by the country's last two major investment banks — Goldman Sachs and Morgan Stanley — to change their status to bank holding companies.

The Fed announced that it had approved the request of the two investment banks. The change in status will allow them to create commercial banks that will be able to take deposits, bolstering the resources of both institutions.

The extraordinary Sunday announcement places the last two independent Wall Street investment banks under supervision by bank regulators and opens a wider range of credit to the two firms.

In a statement, the Federal Reserve said its board had approved the applications of Goldman Sachs and Morgan Stanley to become bank holding companies and authorized credit to the two firms "against all types of collateral" that commercial banks can use to get central bank loans.

The Fed also made these collateral arrangements available to the broker-dealer subsidiary of investment firm Merrill Lynch, which was bought a week earlier by Bank of America at the same time that another Wall Street giant, Lehman Brothers, filed for bankruptcy.

Bank of America Corp's $50 billion acquisition of Merrill Lynch & Co

Merrill Lynch is one of the world's leading financial management and advisory companies, providing financial advice and investment banking services

Multiple news sources are reporting that Bank of America has struck a $44 billion deal to buy Merrill Lynch, pending final legal documents. Apparently, the federal government was involved in brokering the deal to prevent a collapse of Merrill Lynch. Meanwhile, a plan to rescue Lehman Brothers has apparently failed and Lehman is expected to be liquidated. AIG appears to be next, as it is facing a liquidity crisis. Along with the collapse / bail out of Bear Stearns earlier in the year, Wall Street appears to be in serious trouble.

Bank of America is the nation’s largest retail bank and had the opportunity to buy Lehman as well, but passed for the chance to buy Merrill Lynch, the nation’s largest retail brokerage. With the largest retail bank and retail brokerage, Bank of America may now be the country’s most important financial institution. Lehman Brothers and AIG are two of the largest and oldest financial institutions in America. If one or both collapse, there would be reverberations throughout the world.

"Acquiring one of the premier wealth management, capital markets, and advisory companies is a great opportunity for our shareholders,” Bank of America Chairman and Chief Executive Officer Ken Lewis said. “Together, our companies are more valuable because of the synergies in our businesses.”

"Merrill Lynch is a great global franchise and I look forward to working with Ken Lewis and our senior management teams to create what will be the leading financial institution in the world with the combination of these two firms," said John Thain, chairman and CEO of Merrill Lynch.

How You Can Survive The Credit Card Crunch

If you thought the mortgage market was the only area of borrowing being hit by the credit crunch, then think again. Credit cards and loans are also harder to come by, and this is bad news for those struggling to make ends meet each month.

The next big financial issue for America is credit card debt. Coming on top of the sub-prime mortgage mess, credit-card defaults will be the next blow to both consumers and our financial institutions.

Americans now have nearly $1 trillion outstanding on credit cards. That's the amount "riding" as balances carried forward every month, on which interest is charged. Nearly half of those accounts are paying only the minimum monthly payment.

Americans are falling behind on their credit card payments at an alarming rate, sending delinquencies and defaults surging by double-digit percentages in the last year and prompting warnings of worse to come.

An Associated Press analysis of financial data from the country's largest card issuers also found that the greatest rise was among accounts more than 90 days in arrears.

Experts say these signs of the deterioration of finances of many households are partly a byproduct of the subprime mortgage crisis and could spell more trouble ahead for an already sputtering economy.

Crisis in Credit Default Swaps (CDS)

You think the US subprime crisis is big?? Wait till you take a look at the NEXT BIG CRISIS that will be caused by Credit Default Swaps (CDS) in a potential colossus problem! I mean sure the US subprime has cause losses to the tune of over US$200 billion… but the Credit Defaults Swaps are problems with the big T. Yes, the problems are in the trillions… or US$50 trillion to be exact! That is over 3 times the US GDP (US$13 Trillion) and many many times Malaysia’s GDP (don’t ask).

Credit Default Swaps (CDS) are financial instruments (or derivatives) to transfer the credit risk of fixed income products. The buyer of a CDS receives credit protection while a seller ‘guarantees’ the credit worthiness of the product. For example, ‘Mr. Investor Inc’ purchases a US$1bil bond from ‘Mr. In Need of Cash Inc’, but is not sure of its credit worthiness. So Mr. Investor Inc purchases a CDS from ‘Mr. Solid Bank Inc’ to transfer its credit risk by paying a premium of US$50 mil to Mr. Solid Bank Inc. At first, this seems like easy money for Mr. Solid Bank Inc as long as Mr. In Need of Cash Inc does not default. If there is a default, Mr. Solid Bank Inc will have to pay Mr. Investor Inc US$1bil if the bond is totally worthless.

Somewhere along the way Mr. Solid Bank Inc sold the CDS to ‘Mr. Hedge Fund Inc’ who in turn sold it to ‘Mr. Greedy Trader Inc’, who in turn sold it to ‘Mr. Speculator Inc’. If Mr. In Need of Cash Inc defaults and somewhere along the line Mr. Speculator Inc has no capability to cover the US$1bil in default, it will affect everyone along the line and you will find that Mr. Solid Bank Inc. will not be so solid anymore. So a potential US$1bil in losses are not just US$1bil in value but multiplied 4 times over (in this example) to US$4bil in write-downs. Of course, I am using a simplistic calculation for my illustration. But just to give you an idea on how big this problem is… the US commercial loan market is worth US$5 trillion but the volume of CDS outstanding is US$50 trillion. It simply means, CDS have changed hands and are traded many times over, thus further amplifying the problem.

If just 1% of the CDS in the market goes bust… somewhere in the financial system there will be US$ 500 billion in losses (far greater than subprime, so far). In fact, some companies that are already affected are American International Group (AIG) with CDS losses of US$11.5 billion and not forgetting that the top 25 banks in US holds more than US$ 13 trillion in Credit Default Swaps potentially triggering The Next Crisis. See the problem right now? Well they don’t call derivatives “financial weapons of mass destruction” for nothing. In the famous words of Warren Buffett himself; “…counterparties record profits and losses (often huge in amount) in their current earnings statement without so much as a penny changing hands. The range of derivatives contracts is limited only by the imagination of man (or sometimes, so it seems, madmen).”

If this is too much gloom for you in a day (sorry, about that mate)… why not take a look at a place which seems to defy the gloomy economic outlook? A place where luxury automobile dealers like Ferrari Maserati and Bentley Motors have arrived in this town. Land investments anyone?

Will AIG Insurances go to bangkruptcy?

AIG or American International Group, is the giant world insurance company based in New York City US. On 16 September 2008, The AIG will file for bankruptcy possibly today or tomorrow. What could keep it from filing is a $75 billion raise in capital from the remaining investment banks. But thanks to a $14 billion margin call on its Credit Default Swaps (CDSs) resulting from S&P's downgrade of its credit rating, this capital raise is unlikely to happen.

Company executives were huddled with advisers last night planning a rescue deal, following a threat on Friday by Standard & Poor's, the credit rating agency, to downgrade the company's debt. AIG shares collapsed by 31 per cent in the hours after that threat was made, and Robert Willumstad, recently installed as chief executive, made plans to bring forward a review of the business that was previously scheduled for 25 September.

The emergency restructuring plan, which AIG was aiming to announce before the start of trading this morning, is likely to include the disposal of major assets including its aircraft leasing business, International Lease Finance Corp. It is also believed to be considering disposals of assets related to its property and casualty insurance businesses.

In the continuing meltdown in the US financial market, World's largest insurer, American International Group (AIG) was today downgraded by credit rating agencies and was racing against time to find a multi-billion dollar infusion to stay afloat.

If AIG declares bankruptcy and they decide to sell off American General, their life insurance subsidiary, there will be a line of companies ready to buy that block of business. If that happens, you will be notified and your next annual payment will be made to a different life insurance company. By law all of the guarantees such as death benefit, term length and rates have to remain the same, so your coverage will be uninterrupted and unchanged.

While this weeks news has been upsetting and volatile, insurance companies are purchased by other insurance companies all the time. A few examples recently would be Chase being purchased by Protective Life and Traveler's Life being purchased by Met Life.

Lehman Brothers US investment Bank bangkruptcy

Lehman Brothers , the fourth largest investment bank in the US, has declared itself bangkruptcy. What exactly happened in USA, the biggest economy leader in the world?

Lehman Brothers is declaring bankruptcy, Bank of America is buying Merrill Lynch. Sounds like the beginning to what everyone has been warning me about.

Yes, Lehman Brothers Bankruptcy is something one does not wish it to happen in US. USA is the leader of the world. Developing countries such as those in Africa are looking upto USA to learn the lessons of free market and smart State intervention.

The employees of Lehman Brothers and its supply chain should really look into Africa for better returns on itheir skills, expertise and nvestment.
For those that are at the edges of loosing their jobs , they are invited to really look into contributing their expertise into Africa.

Here are the facts about Lehman Brothers Bangkruptcy

Lehman Brothers Bangkruptcy article from yahoo.com/news

Lehman Brothers declared itself bankrupt Monday and Wall Street rival Merrill Lynch had to be taken over in a new financial earthquake that sent global markets into a slump. ADVERTISEMENT

The US Federal Reserve, European Central Bank and Bank of England injected tens of billions of dollars into money markets after the fall of the banking titans under the weight of the massive financing of bad loans.

Lehman Brothers said it would file for bankruptcy on Monday after a frantic weekend of negotiations failed to arrange a rescue.

In the fallout, Bank of America took over Merrill Lynch in a 50 billion dollar deal, insurance giant AIG was reported to have sought a massive emergency loan to head off its own crisis and a group of banks set up a 70 billion dollars global emergency fund.

Lehman Brothers Bangkruptcy article from rsc.org

Lehman Brothers, the fourth largest investment bank in the US, has filed for bankruptcy protection, dealing a blow to the US chemical industry's hopes of an end to the credit crunch.

The US government's 8 September bailout of the two mortgage giants Fannie Mae and Freddie Mac had raised expectations in the US chemical industry of an easing to the lending squeeze, and a revival in its two key customer sectors of housing and automobiles.

However, Lehman's bankruptcy has reinforced anxieties in Europe about weakening economic conditions. European chemicals companies fear that the full impact of the credit crunch has still not been felt, and could be greatly compounded by the reverberations of a steep fall in oil prices, which could reduce demand for bulk chemicals such as polymers.

Subprime Mortgage definition

What is subprime mortgage exactly means? Will it really make US and the global world into a big recession ?
Here is the definition of Subprime Mortgage, which in Indonesian means "Krisis Kepemilikan Rumah"

Subprime Mortgage definition from Wikipedia :

The subprime mortgage crisis is a current economic problem characterized by contracted liquidity in the global credit markets and banking system. An undervaluation of real risk in the subprime market is cascading, rippling and ultimately adversely affecting the world economy.

The crisis began with the bursting of the US housing bubble and high default rates on "subprime" and adjustable rate mortgages (ARM). Loan incentives, such as easy initial terms, in conjunction with an acceleration in rising housing prices encouraged borrowers to assume difficult mortgages on the belief they would be able to quickly refinance at more favorable terms. However, once housing prices started to drop moderately in 2006–2007 in many parts of the U.S., refinancing became more difficult. Defaults and foreclosure activity increased dramatically, as easy initial terms expired, home prices failed to go up as anticipated, and ARM interest rates reset higher. Foreclosures accelerated in the United States in late 2006 and triggered a global financial crisis through 2007 and 2008. During 2007, nearly 1.3 million U.S. housing properties were subject to foreclosure activity, up 79% from 2006.

Subprime Mortgage definition from About.com :
Definition: A subprime mortgage is granted to borrowers whose credit history is not sufficient to get a conventional mortgage. Often these borrowers have impaired or even no credit history. These can also include interest-only loans.

The subprime mortgage crisis is threatening to put the U.S. economy into a recession. This primer it tracks how the subprime crisis unfolded, affecting first the real estate market and now the economy overall. It gives you definitions of important terms. It also explains how interest rates and real estate play an integral role in the U.S. economy. Finally, it gives resources for those who are suffering from the subprime mortgage crisis directly.