Borrowers placed in loans for higher commissions

As the mortgage boom slowed in 2005 many brokers scrambled to fill their pipelines as the rate of new applications fell. Many of these brokers were putting borrowers that could qualify for prime rate products into a subprime category for the higher yield spread premium paid on the back end by the lender as a rebate. This has left many borrowers in loans with short term fixed rates that switch to an adjustable after the short term expires. Most of these are 2 and 3 year loans which has led to 2007 being the eye opener for the subprime arena. Those with 2 year fixed rates have been getting hit hard by huge increases to their payments this year and this will continue for the next several years.

If you obtained a mortgage in the 2005 - 2006 period I suggest you verify the length of the fixed rate period rather than waiting for the shell shock to hit.

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