What do they mean when they write “sub-prime†borougher?
Sunday, April 6th, 2008James H asked:
A decade ago the mortgage underwriting standards were pretty simple: 10% minimum down; P&I not to exceed 25% of your net income, 35% of your gross income.
A decade ago the mortgage underwriting standards were pretty simple: 10% minimum down; P&I not to exceed 25% of your net income, 35% of your gross income.
Is anyone that does not meet these traditional metrics considered a sub-prime borougher?
Or is there some “new and improved†underwriting standard?
I’ve heard a number of different explanations about what a sub-prime borougher is. I’ve heard things like FICO scores below 600 or below 500. Or boroughers with a history for bankruptcy. I’ve heard boroughers that qualify on stated income.
I am just curious because it seems that this definition is key for estimating how deep the housing correction will be. If the definition hinges on the traditional underwriting standards, then there is a whole lot more correcting in the future.
Question posted courtesy of: Joshua
