Another Subprime story

$1,300...$2,000...there goes your mortgage

Excerpt:

The Sanons had diligently saved $5,000 in preparation to buy their first home, but the sum was just enough to cover the closing costs. So to finance the $290,000 purchase price of a Waltham, Mass home, they took one loan for $232,000 and also a piggyback loan for $58,000, both from New Century Financial, a subprime lender.

The smaller of the two mortgages didn't worry them. The terms were fixed for 30 years at 10.7 percent, and the monthly payment of $538 was something they felt they could handle.

But the larger loan was fixed for just two years. After that, the rate would adjust every six months, which is typical for subprime borrowers

Comments: Was the loan office thinking at all!? Approving this loan hurts the borrower and the lender!