In recent months the number of seizures in the country more than doubled over the same period last year. The reasons for this high share of deposits are numerous. First of all the sub-prime mortgages have ended up in the hands of people who probably could not qualify for the financing of the Convention. So there was the interest rates on loans higher than other loans in line. In addition, many products from sub-prime loans in question floating rates (ARMS), which usually set back in the early years after the establishment of credit.

As sub-prime loans to refer to Chapter 13, is the typical scenario is as follows: The owner qualifies for the loan without a substantial down payment and no documentation of significant revenues. The monthly payment is a stretch for the owner, but it is temporarily manageable. Depending on the type of weapon, the loan to one, two or three years will be deferred. At this time the owner can not later be able to enter the new mortgage payment. The owner is no debt on the property since the type of loan products required to do no longer fulfill this task refinance. Thus, the owner in a difficult situation. The current real estate market would be to sell it almost impossible for the owner of the property and pay the mortgage. Chapter 13, as the business saver home is known, would not be possible in the case of adjusting arms.

The idea behind Chapter 13 bankruptcy is a homeowner to catch up, what the mortgage arrears have to make mortgage payments were in addition to the current time. As prices adjust and reset loan can the owner do not have the current mortgage payment, much less a partial payment to catch up. The situation is basically an end of the world for the owner and the mortgage company. The owner has the ability to make payments and / or refinancing of outstanding debt was at a later date. The lack of appreciation of real estate has led the inability of owners to do just that.

What we will probably see to sell a large number of homes on the market. Many borrowers file for Chapter 7 bankruptcy, not Chapter 13 bankruptcy. I think the market takes five to seven years to show signs of satisfaction. It will be interesting to see if Congress amends the bankruptcy code to allow mortgage debt to be paid. If not permanently, then for a short period of three to five years.


Subprime