Not Ranked
1nt Cobra
Yes some of them actually thought the rates would stay low for many years as the LIBOR rate had never been high and is still not high to this very day.
Some rate increases that are coming due will put mortgages over the 18% APR. These loans (some of them) are based n LIBOR rates and those rates are still very competitive to this day. The mortgage companies are raising the rates because the contracts say they can not because the index has gone up. There is a major difference. As for them loosing money the do not loose money because the notes are based on decreasing term. Meaning you pay the interest first proportionatly and the the principle majority is aid at the end. The average time an American spends in his home is only seven years. So very little principle is paid and the banks collect all the interest..up front.
I hope that explains it. I may have to re read this and try again.
|