Mortgage Refinance with Poor Credit

Mortgage refinance with poor credit – is it possible? I would have to say that depends, and it depends on a number of factors, not least of which is the amount of equity available to the person needing to refinance their mortgage and how poor their credit is. Although, I think we all welcome a return to rational lending practices – regardless of the open criticism being applied to the banking system by the politicians, for “not lending enough,” they know as well as the bankers that lending more is not either possible or sensible at the moment.

The British politicians are being the most vocal in attacking the banks for not lending, but at the same time are hastily introducing more and more laws to try and prevent the sort of crash we have just witnessed. Much the same scenario is playing out around the world. Politicians calling for more lending while increasing the amount of money they pay themselves, taking bribes for selling government contracts and generally treating us like idiots. Which – in a sense –I suppose we are. We can only really blame ourselves and our own greed for the current situation.

I was one of the stupid ones – I did not get myself in hock up to my eyeballs to buy a beachfront condominium I could not afford. Yet I will be one of the ones helping to pay back into the system when taxes inevitable rise and inflation devalues the money in my bank account.

A good part of the problem is that many outstanding mortgages are neither viable, nor affordable, no matter the level of refinancing available. These sub-prime and Adjustable Rate Mortgages (ARMs)  were never intended to be repaid. The lender was not expecting them to be, the borrower was not expecting to pay them, and no one, anywhere along the chain that ensued had taken the trouble to do any due diligence. The intention was that the property the mortgage is related to was supposed to have been either “flipped,” or refinanced when the loan reset. Oh dear………

We now have a situation whereby anyone who bought real estate after 2003 in the US is in a position of that real estate being worth less than they originally paid for it – seeing as prices are now down below 2003 levels. This puts an awful lot of people in a tight situation – including those who did intend to repay and did have the wherewithal. If they need to move from one area to another, they are faced with the likelihood of having to sell the property for less than is owed on it.

This is generally not a popular move – with either the borrower or the lender. In fact – the lender may well insist on full repayment when the home is sold. Even though the lender is, at least in part, responsible for the situation, they are unlikely to step up to the plate for a borrower unless forced to do so legally. The lenders are not rally open to negotiation at the moment and it seems they would prefer to go the legal route of forcing their borrowers into foreclosure and bankruptcy than negotiate a new loan based on the current value and writing off the outstanding difference. They will have to do so in the end, but I suppose they can squeeze enough blood out of a few stones along the way for this to be worthwhile. Or they genuinely do not give a shit. The latter I fear.

All of which makes refinancing with poor credit an expensive and difficult operation currently. The mortgage rates for refinancing with bad credit are pretty horrendous, the lenders are now requiring as much as 30% equity – either as equity in the property or cash, and there ain't no such thing as a 100% home equity loan any more. Although we really do not have a choice but to revert to rational lending; unfortunately, the short-term pain involved for thousands will mean foreclosures, bankruptcies and ongoing credit issues. The banks of course have a different set of pains to go through, most of which seems to be shedding jobs and staff.

I was actually shocked at something the British Government Inc just announced. I thought I was past being shocked at just how fucking stupid these people think the public are. They announced - get this – they are outsourcing some government jobs to India – because it is cheaper. Such unbelievable shortsightedness is almost impossible to grasp. At a time when the British economy is shrinking and unemployment is going through the roof – these dimwits are outsourcing government jobs to another country. Words almost fail. And this is not meant as an attack on India. I am sure they can do the jobs cheaper. That is not the point.