Your fallacy is that you assume that these loans would fail.
Loans to people with lower credit scores, lower incomes and lower down payments fail
at a higher rate than conforming loans.
Since they are in the bank's "neighborhood, the bank can lower the interest rates to get the monthly payments at $800 & a 10% down payment.
The bank is supposed to give a riskier borrower a lower interest rate?
What could go wrong?
It may be lower profit but how is it riskier as far as failure?
Lower income, lower credit score, lower down payment and also a lower interest rate
and you don't see how it is riskier?
Because the bank cleared them at lower interest rates. If they could not afford it, the bsnk would not have OK'd the loan.
Come on My Economics. You can't be this silly.
The bank uses the same metric for both the standard & the adjusted rate. They would have equal risk of failure.
Because the bank cleared them at lower interest rates. If they could not afford it, the bsnk would not have OK'd the loan.
You think banks gave worse risks lower rates....because the bank could afford it? LOL!
Have you always been clueless, or have you had a recent brain injury?
The bank uses the same metric for both the standard & the adjusted rate. They would have equal risk of failure.
Hilarious!! And seriously wrong.
Now you are just being an asshole.
You are twisting what was said or you are a ******* moron.
But I will try again.
Banks have a metric to measure the ability of a borrower to meet the terms of the loan.
The bank applies this metric to the lower interest rates, and this metric approves it.
You are claiming the bank metric is flawed & it spits out the wrong answer on CRA loans
Really?