Lenders have abruptly stopped offering the most popular type of subprime mortgage. Credit-challenged borrowers suddenly have fewer options.
"Many borrowers are not going to be able to refinance," says Deborah Goldstein, executive vice president of the Center for Responsible Lending. The consumer watchdog group has criticized loose standards for subprime mortgages, which are home loans for people with problem credit -- generally, with credit scores below 620.
Over the past few years, the most common type of subprime loan has been an adjustable-rate mortgage known as the 2/28 ARM. Since mid-July, five of the six biggest subprime mortgage lenders stopped offering 2/28 ARMs. Suddenly, there's a shortage of the type of mortgage preferred by about 60 percent of subprime borrowers.
For more details and information on refinancing options for subprime loans, click http://www.bankrate.com/baw/news/mortgages/subprime_20070726_a1.asp
