1
TH
E S
UB
PR
IME
M
AR
KE
T M
EL
TD
OW
N:
Shou
ld I
Pan
ic?
A C
on
vers
ati
on
ab
ou
t th
e S
ub
pri
me
C
risi
s
Ma
rch
20
07
Wri
tte
n b
y:
Gw
en
do
lyn
Str
ing
er,
MB
A,
MP
AD
RE
Lic
en
sed
Mo
rtg
ag
e C
on
sult
an
t, N
ota
ry
cell
(51
0)
96
5-8
74
3
efa
x (5
10
) 4
05
-84
96
gw
en
stri
ng
@sb
cglo
ba
l.n
et
ww
w.s
rtfi
na
nci
al.
com
2
Co
pyr
igh
t(c)
20
07
, S
trin
gC
o O
nlin
e P
ub
lish
ing
Do
no
du
plic
ate
, e
lect
ron
ica
lly o
r in
pri
nt
wit
ho
ut
the
exp
ress
ed
wri
tte
n c
on
sen
t o
f th
e p
ub
lish
er.
Th
is in
form
ati
on
is in
ten
de
d t
o s
erv
e a
s in
form
ati
on
fo
r m
y cl
ien
ts a
nd
po
ten
tia
l cl
ien
ts.
Th
e i
nfo
rma
tio
n
is c
orr
ect
to
th
e b
est
of
my
kno
wle
dg
e b
ase
d o
n m
y e
xpe
rie
nce
as
a r
ea
l e
sta
te m
ort
ga
ge
lo
an
co
nsu
lta
nt.
Th
is b
oo
kle
t d
oe
s n
ot
att
em
pt
to m
ake
a
ny
pre
dic
tio
ns
no
r p
rom
ise
s a
bo
ut
the
sta
te o
f yo
ur
rea
l est
ate
inve
stm
en
ts.
Co
nsu
lt y
ou
r C
ert
ifie
d P
ub
lic
Acc
ou
nta
nt
(CP
A)
an
d/o
r yo
ur
att
orn
ey
for
ad
dit
ion
al
gu
ida
nce
fo
r yo
ur
spe
cifi
c n
ee
ds.
Str
ing
Co
On
line
Pu
blis
hin
g
em
ail:
str
ing
co@
ao
l.co
m
(51
0)
48
9-7
01
0
3
Con
tent
•C
hapt
er 1
: “I
ntro
duct
ion”
on
page
4
•C
hapt
er 2
: “C
redi
t Sco
res”
on
page
5
•C
hapt
er 3
: “S
ubpr
ime
Lend
ing”
on
page
15
•C
hapt
er 4
: “W
hat i
s th
e S
ubpr
ime
Cris
is?”
on
page
18
•C
hapt
er 5
: “W
hat t
ype
of lo
an d
o I h
ave?
” on
pag
e27
•C
hapt
er 6
: “W
hat a
re m
y op
tions
?” o
n pa
ge29
•C
hapt
er 7
: “W
hat a
bout
firs
t tim
e ho
me
buye
rs?”
on
page
31
•C
hapt
er 8
:“C
an I
purc
hase
a h
ome
from
a n
ew d
evel
-op
men
t?”
on p
age
33
•C
hapt
er 9
: “W
hat d
o I d
o ne
xt?”
on
page
34
4 Cha
pter
1:
Intr
oduc
tion
Th
e S
ub
pri
me
ma
rke
t a
pp
ea
rs t
o b
e t
he
ta
il
wa
gg
ing
th
e d
og
in
to
da
y’s
ho
usi
ng
ma
rke
t, a
ffe
ctin
g
ho
usi
ng
pu
rch
ase
s, t
he
sto
ck m
ark
et
on
wa
ll st
ree
t
an
d t
he
eco
no
my
in g
en
era
l. T
urn
on
th
e t
ele
visi
on
,
rad
io,
or
op
en
a n
ew
spa
pe
r a
nd
yo
u w
ill h
ea
r o
f th
e
Su
bp
rim
e l
en
din
g c
risi
s. T
his
ha
s g
en
era
ted
ph
on
e
calls
fro
m m
y cl
ien
ts a
skin
g I
F a
nd
HO
W t
his
aff
ect
the
m.
I h
on
est
ly c
an
’t s
ay,
do
n’t
pa
nic
. B
ut
I ca
n
en
cou
rag
e y
ou
to
ge
t th
e f
act
s, m
ee
t w
ith
yo
ur
loa
n
con
sult
an
t, a
nd
ma
ke a
n i
nfo
rme
d d
eci
sio
n a
bo
ut
you
r m
ort
ga
ge
ne
ed
s. T
he
re a
re o
bvi
ou
s re
aso
ns
to
be
co
nce
rne
d b
ut
on
ce y
ou
un
de
rsta
nd
wh
ere
yo
u
sta
nd
in
th
is m
att
er,
yo
u c
an
re
lax,
ma
ke i
nfo
rme
d
de
cisi
on
s, a
nd
wo
rk t
ow
ard
pre
pa
rin
g y
ou
rse
lf t
o
surv
ive
an
d t
hri
ve i
n t
his
re
al
est
ate
in
vest
me
nt
ma
rke
t. T
his
bo
okl
et
is a
Q&
A d
esi
gn
ed
to
he
lp y
ou
un
de
rsta
nd
wh
at
is g
oin
g o
n i
n t
he
su
bp
rim
e m
ark
et,
ho
w i
t a
ffe
cts
you
, w
ha
t to
exp
ect
in
th
e s
ho
rt-
an
d
lon
g-t
erm
; a
nd
ult
ima
tely
wh
at
act
ion
, if
an
y, y
ou
sho
uld
ta
ke.
5
Cha
pter
2:
Cre
dit
Scor
esB
efo
re w
e c
an
be
gin
to
ha
ve a
co
nve
rsa
tio
n o
n
sub
pri
me
le
nd
ing
, it
is
imp
ort
an
t to
dis
cuss
th
e
follo
win
g c
red
it t
op
ics:
•“W
hat i
s F
ICO
?” o
n pa
ge6
•“W
ho a
re th
e cr
edit
repo
rtin
g ag
enci
es?”
on
page
7
•“W
hat a
re th
e cr
edit
Do’
s an
d D
on’ts
?”
on p
age
9
•“H
ow d
o I r
epai
r m
y cr
edit?
” on
pag
e14
We
ne
ed
to
un
de
rsta
nd
th
e r
ole
th
at
cre
dit
sco
res
pla
y in
ou
r “l
en
da
bili
ty.”
We
are
in
un
da
ted
wit
h l
oa
n
ad
vert
ise
me
nt
on
te
levi
sio
n,
rad
io,
an
d p
rin
t cl
aim
ing
no
fe
es,
no
po
ints
, n
o c
losi
ng
co
sts,
etc
. Y
ou
mig
ht
no
t fu
lly u
nd
ers
tan
d t
he
le
nd
ing
ja
rgo
n b
ut
you
do
un
de
rsta
nd
th
at
this
re
pre
sen
ts l
ess
mo
ne
y co
min
g
ou
t o
f yo
ur
po
cke
t. T
he
se c
lea
ver
ad
s h
igh
ligh
t th
e
gre
at
pro
mo
tio
ns
bu
t d
ow
np
lay
the
fa
ct t
ha
t th
ese
6 pro
mo
tio
n a
re o
nly
off
ere
d t
o e
xce
llen
t cr
ed
it c
an
di-
da
tes.
Th
e f
ine
pri
nt
usu
ally
re
ad
s “f
or
qu
alif
ied
ap
plic
an
ts o
nly
.”
Wha
t is
FIC
O?
Yo
ur
cre
dit
sco
res
ass
ign
ed
by
Fa
ir I
ssa
cs C
red
it
Org
an
iza
tio
n (
FIC
O)
dri
ves
fro
m w
hic
h l
oa
n p
rog
ram
you
will
be
co
nsi
de
red
by
len
de
rs.
FIC
O s
core
s a
re
de
sig
ne
d t
o a
uto
ma
tica
lly p
red
ict
be
ha
vio
r b
ase
d o
n
cre
dit
act
ivit
y; i
.e.,
yo
ur
like
liho
od
to
pa
y yo
ur
bill
s.
Th
e n
ati
on
al
me
dia
n F
ICO
sco
re i
s 7
23
.
Th
e F
ICO
sco
re r
eq
uir
em
en
ts a
re a
dju
ste
d f
rom
tim
e-t
o-t
ime
by
len
de
rs t
o m
itig
ate
cre
dit
ris
ks.
Wh
at
wa
s a
n a
cce
pta
ble
FIC
O s
core
in
20
03
ha
s ch
an
ge
d
in t
he
mis
t o
f th
is s
ub
pri
me
cri
sis.
Yo
u u
sed
to
be
ab
le t
o g
et
a s
ub
pri
me
lo
an
at
58
0 F
ICO
. To
da
y, y
ou
wo
uld
be
lu
cky
to f
ind
a l
en
de
r w
illin
g t
o l
en
d b
elo
w
66
0.
Alr
ea
dy,
if
you
fa
ll b
elo
w t
he
66
0 F
ICO
, yo
u c
an
7
see
ho
w y
ou
ha
ve b
en
efi
ted
in
th
e p
ast
fro
m
sub
pri
me
le
nd
ing
an
d h
ow
yo
u m
igh
t b
e n
eg
ati
vely
aff
ect
ed
or
limit
ed
in
to
da
y’s
ma
rke
t.
Who
are
the
cred
it re
port
ing
agen
cie
s?Y
ou
ne
ed
to
be
aw
are
th
at
the
re a
re t
hre
e c
red
it
ag
en
cie
s to
wh
ich
yo
ur
cre
dit
sco
res
are
re
po
rte
d b
y
you
r cr
ed
ito
rs:
•E
xper
ian
•T
rans
Uni
on
•E
quifa
x
Ta
ble
2-1
:F
ICO
Cre
dit
Re
po
rtin
g
EX
PE
RIA
NT
RA
NS
UN
ION
E
QU
IFA
X
70
1 E
xpe
ria
n P
kwy
P.O
. B
ox
20
02
Alle
n,
TX
75
01
5(8
88
) 3
97
-37
42
2 B
ald
win
Pla
ce
P.O
. B
ox
10
00
Ch
est
er,
PA
19
02
2(8
00
) 8
88
-42
13
P.O
. B
ox
74
02
41
Atl
an
ta,
GA
3
03
74
02
41
(80
0)
68
5-1
111
8 FIC
O S
core
Sav
ings
Exa
mpl
e
Acc
ord
ing
to
ww
w.m
yfic
o.c
om
, th
e h
igh
er
you
r
FIC
O s
core
s, t
he
le
ss y
ou
ca
n e
xpe
ct t
o p
ay
for
you
r
loa
n.
Th
ey
pro
vid
e t
he
fo
llow
ing
exa
mp
le b
ase
d o
n a
$2
16
,00
0 3
0-y
ea
r, f
ixe
d-r
ate
mo
rtg
ag
e:
If y
ou
r F
ICO
s
co
re i
s
Yo
ur
inte
res
t ra
te i
s
...a
nd
yo
ur
mo
nth
ly p
ay
me
nt
is
Ac
tua
l N
ati
on
al
Inte
res
t R
ate
s -
Up
da
ted
Da
ily
76
0 -
85
0
5.7
8%
$
1,2
64
70
0 -
75
9
6%
$
1,2
95
68
0 -
69
9
6.1
8%
$
1,3
20
66
0 -
67
9
6.3
9%
$
1,3
50
64
0 -
65
9
6.8
2%
$
1,4
11
62
0 -
63
9
7.3
7%
$
1,4
91
9
As
you
ca
n s
ee
in
th
is F
ICO
exa
mp
le u
sin
g t
od
ay'
s
na
tio
na
l ra
tes,
a p
ers
on
wit
h a
FIC
O s
core
of
76
0 o
r
be
tte
r w
ill p
ay
$2
27
le
ss p
er
mo
nth
fo
r a
$2
16
,00
0
30
-ye
ar,
fix
ed
-ra
te m
ort
ga
ge
th
an
a p
ers
on
wit
h a
FIC
O s
core
of
62
0 -
th
at's
a s
avi
ng
s o
f $
2,7
24
pe
r
yea
r. Y
ou
ca
n s
ee
ho
w e
sse
nti
al
imp
rovi
ng
yo
ur
sco
res
can
be
if t
he
y a
re lo
w,
an
d a
lso
ho
w im
po
rta
nt
it i
s to
ke
ep
th
em
hig
h i
f th
ey
are
go
od
.
Wha
t ar
e th
e c
redi
t D
o’s
and
D
on’ts
?T
he
hig
he
r yo
ur
cre
dit
sco
re,
the
le
ss a
cre
dit
ris
k
you
are
to
po
ten
tia
l le
nd
ers
. H
igh
er
is b
ett
er.
Alt
ho
ug
h p
ayi
ng
off
all
you
r p
ast
du
e d
eb
ts a
nd
clo
sin
g o
ut
acc
ou
nts
mig
ht
sou
nd
lik
e t
he
lo
gic
al
thin
g t
o d
o t
o p
rep
are
fo
r a
mo
rtg
ag
e lo
an
, yo
u w
ou
ld
be
su
rpri
sed
th
at
such
act
ivit
y ju
st m
igh
t ca
use
yo
ur
FIC
O s
core
to
dro
p s
ub
sta
nti
ally
, in
fa
ct,
en
ou
gh
to
cau
se y
ou
no
t to
qu
alif
y fo
r a
lo
an
. I
am
no
t
ad
voca
tin
g t
ha
t yo
u n
eg
lect
pa
yin
g y
ou
r d
eb
t. I
n f
act
,
10 len
de
rs t
ypic
ally
ap
pro
ve l
oa
ns
on
th
e c
on
dit
ion
th
at
ba
d d
eb
t b
e p
aid
off
or
bro
ug
ht
curr
en
t p
rio
r to
fun
din
g.
I d
o w
an
t yo
u t
o u
nd
ers
tan
d,
ho
we
ver,
th
e
Do
’s a
nd
Do
n’t
s o
f cr
ed
it a
ctiv
ity
pri
or
to o
r d
uri
ng
a
mo
rtg
ag
e l
oa
n a
pp
lica
tio
n.
FIC
O h
as
bu
ilt i
n
ele
ctro
nic
ru
les
wh
ich
au
tom
ati
cally
ca
lcu
late
cre
dit
rati
ng
s b
ase
d o
n c
ert
ain
act
ivit
ies
pe
rfo
rme
d b
y th
e
ind
ivid
ua
l.
Pre
-Loa
n C
redi
t Don
’ts
1D
o no
t pa
y of
f cre
dit c
olle
ctio
ns o
r ba
d de
bts
whi
ch
have
not
had
any
act
ivity
for
over
1 y
ear.
For
exa
mpl
e, if
yo
u ow
e a
delin
quen
t tel
epho
ne b
ill a
nd th
e re
port
ed
date
is m
ore
than
12
mon
th a
go, p
ayin
g th
at b
ill o
nly
brin
gs th
at b
ill c
urre
nt a
nd w
ill a
ffect
you
r sc
ores
ne
gativ
ely.
In o
ther
wor
ds, t
he o
ld b
ad d
ebt i
s le
ss
dam
agin
g th
an th
e cu
rren
t pai
d-of
f bad
deb
t. G
o fig
ure!
2D
o no
t op
en a
ny n
ew c
redi
t acc
ount
s es
peci
ally
bo
rrow
ing
mon
ey to
be
used
tow
ard
clos
ing
cost
of t
he
loan
. Prio
r to
fund
ing,
lend
ers
typi
cally
pul
l a n
ew c
redi
t re
port
to m
ake
sure
no
new
act
ivity
has
take
n pl
ace.
11
3D
o no
t in
cur
new
30,
60,
or
90 d
ay n
egat
ive
repo
rtin
g.
Con
tinue
to p
ay y
our
oblig
atio
ns o
n tim
e.
4D
o no
t ch
arge
ove
r 50
% o
f cre
dit c
ard
limits
. The
op
timal
num
ber
is r
eally
abo
ut 6
0% b
ut th
e id
ea is
that
m
axed
out
cre
dit c
ause
s yo
ur F
ICO
sco
re to
dro
p su
bsta
ntia
lly. T
hus,
if y
ou h
ave
a cr
edit
card
with
$5,
000
limit
and
have
use
d $4
999,
this
ref
lect
s ne
gativ
ely
on
your
FIC
O. K
eep
that
usa
ge to
50%
, i.e
. $2,
500
or
belo
w, t
o be
saf
e. P
ay o
ff th
e en
tire
acco
unt m
onth
ly if
yo
u ca
n.
5D
o no
t cl
ose
any
exis
ting
acco
unts
. You
r F
ICO
sco
re is
st
rong
est i
f you
hav
e th
ree
to fi
ve tr
ade
lines
(op
en
revo
lvin
g or
inst
allm
ent c
redi
t acc
ount
s) w
hich
hav
e be
en m
aint
aine
d fo
r a
long
per
iod
of ti
me.
6D
o no
t pu
rcha
se a
car
or
any
larg
e ite
ms.
Don
’t go
out
an
d ch
arge
up
new
furn
iture
for
the
hous
e un
til y
ou
have
sec
ured
the
loan
for
the
hous
e. O
ther
wis
e, y
ou
mig
ht e
nd u
p w
ith th
e fu
rnitu
re a
nd n
o ho
use.
7D
o no
t us
e a
cred
it co
unse
ling
repa
ir co
mpa
ny. T
hese
co
mpa
nies
are
legi
timat
e. T
hey
typi
cally
con
solid
ate
your
bill
s an
d al
low
you
to p
ay y
our
debt
s of
f thr
ough
a
12
sing
le p
aym
ent t
o th
em. T
he c
redi
t cou
nsel
ing
com
pany
is
then
req
uire
d to
rep
ort t
o th
e cr
edit
bure
au. Y
ou th
ink
you
are
doin
g a
good
thin
g to
con
solid
ate
and
pay
off
thes
e de
bts.
How
ever
, man
y le
nder
s tr
eat c
redi
t co
unse
ling
the
sam
e w
ay th
ey tr
eat b
ankr
uptc
y: in
so
me
case
s cr
edit
coun
selin
g au
tom
atic
ally
dis
qual
ifies
yo
u fo
r a
part
icul
ar lo
an p
rogr
am. A
gain
, go
figur
e! T
o re
pair
your
cre
dit,
use
the
info
rmat
ion
prov
ided
in th
e en
clos
ed fr
ee C
redi
t Rep
air
CD
RO
M.
8D
o no
t app
ly fo
r an
y cr
edit
card
s co
min
g ou
t of a
ba
nkru
ptcy
. Thi
s is
a n
egat
ive
mar
k. In
stea
d, o
pen
secu
red
cred
it ca
rds
(dis
cuss
ed in
the
“Pre
-Loa
n C
redi
t D
o’s”
on
page
12.)
Yo
u c
an
be
qu
alif
ied
wit
h a
d
isch
arg
ed
BK
.
Pre
-Loa
n C
redi
t Do’
s
1D
o m
aint
ain
your
cre
dit r
atin
g.
2D
o c
onsi
der
open
ing
two
or th
ree
“sec
ured
” cr
edit
card
ac
coun
ts w
ith li
mits
of $
200
to $
500
(dep
endi
ng u
pon
min
imum
req
uire
men
t of t
he b
ank)
to in
crea
se y
our
ratin
g. T
hese
are
acc
ount
s w
ith y
our
loca
l ban
k w
here
13
you
are
issu
ed a
cre
dit c
ard
base
d on
a s
et d
olla
r am
ount
put
into
a c
onne
cted
(se
cure
d) s
avin
gs
acco
unt.
Your
cre
dit l
imit
is th
e am
ount
ava
ilabl
e in
the
savi
ngs
acco
unt.
The
gre
at th
ing
abou
t sec
ured
cre
dit
card
s is
that
whe
n yo
u ap
ply,
ther
e is
no
cred
it in
quiry
hi
t (ba
nks
don’
t hav
e to
che
ck y
our
cred
it) a
nd o
nce
open
ed, t
hese
cre
dit c
ards
are
rep
orte
d m
onth
ly to
the
cred
it bu
reau
just
as
any
othe
r cr
edit
card
. Kee
p to
the
belo
w 5
0% c
redi
t usa
ge r
ule
and
pay
on ti
me.
3D
o c
onsi
der
bein
g ad
ded
as a
“si
gner
” on
a lo
ng a
nd
wel
l est
ablis
hed
cred
it ca
rd o
f a tr
uste
d fa
mily
mem
ber
such
as
your
par
ent.
You
don’
t nee
d to
be
issu
ed a
cop
y of
the
cred
it ca
rd o
r ev
en k
now
the
acco
unt n
umbe
r. B
y be
ing
adde
d as
a s
igne
r, th
is a
llow
s yo
u to
take
ad
vant
age
of th
is a
lread
y es
tabl
ishe
d ex
celle
nt c
redi
t an
d is
rep
orte
d m
onth
ly to
the
cred
it bu
reau
on
your
be
half.
You
imm
edia
tely
get
the
cred
it hi
stor
y an
d lo
ngev
ity o
f tha
t par
ticul
ar c
ard.
Thi
s is
par
ticul
arly
us
eful
if y
ou d
on’t
have
the
requ
ired
thre
e to
five
cre
dit
trad
e lin
es o
n yo
ur c
redi
t rep
ort.
14 How
do
I re
pair
my
cred
it?
Ca
uti
on
! D
o n
ot
con
tact
a c
red
it c
ou
nse
ling
ag
en
cy.
As
I e
xpla
ine
d e
arl
ier,
cre
dit
co
un
selin
g i
s
tre
ate
d b
y m
an
y le
nd
ers
lik
e a
ba
nkr
up
tcy.
En
clo
sed
in t
his
bo
okl
et
is a
fre
e C
DR
OM
co
nta
inin
g s
tep
-by-
ste
p c
red
it r
ep
air
in
stru
ctio
ns,
as
we
ll a
s e
asy
to
un
de
rsta
nd
ge
ne
ral
cre
dit
in
form
ati
on
. T
his
cre
dit
rep
air
kit
wa
s w
ritt
en
an
d i
s p
rovi
de
d c
ou
rte
sy o
f
Ton
y B
roo
ks,
Re
al
Est
ate
In
vest
me
nt
Bro
ker
an
d
bro
ker-
on
-re
cord
fo
r S
RT
Fin
an
cia
l, a
s a
to
ol
to
pre
pa
re y
ou
an
d t
o h
elp
us
he
lp y
ou
to
co
nti
nu
e t
o
surv
ive
an
d t
hri
ve i
n t
his
re
al
est
ate
in
vest
me
nt
ma
rke
t.
15
Cha
pter
3:
Subp
rim
e L
endi
ngF
ina
lly,
let’
s ta
lk a
bo
ut
the
su
bp
rim
e l
en
din
g t
op
ics:
•“W
hat a
re S
ubpr
ime
mor
tgag
es?
” on
pag
e16
•“W
hat a
re S
ubpr
ime
FIC
O s
core
s?”
on p
age
17
16 Wha
t ar
e S
ubpr
ime
mor
tga
ges?
Su
bp
rim
e m
ort
ga
ge
s a
re h
om
e l
oa
ns
ma
de
to
bo
rro
we
rs w
ith
“w
ea
k cr
ed
it s
core
s.”
Th
e p
urp
ose
of
sub
pri
me
le
nd
ing
is
to m
ake
ho
me
ow
ne
rsh
ip o
pp
or-
tun
itie
s a
vaila
ble
an
d a
ffo
rda
ble
to
th
e c
urr
en
t 2
.2
mill
ion
ho
me
ow
ne
rs o
f le
ss t
ha
n p
erf
ect
cre
dit
bu
t
wh
o a
re s
till
con
sid
ere
d “
go
od
” cr
ed
it r
isks
ba
sed
on
oth
er
fact
ors
.
Su
bp
rim
e l
oa
n o
rig
ina
tio
ns
tota
led
ab
ou
t $
60
5
bill
ion
in
20
06
, o
r a
bo
ut
a f
ifth
of
the
ove
rall
ma
rke
t
for
U.S
. h
om
e l
oa
ns,
acc
ord
ing
to
tra
de
pu
blic
ati
on
Insi
de
Mo
rtg
ag
e F
ina
nce
1.
Wit
h t
he
pro
ble
ms
of
sub
pri
me
lo
an
s g
oin
g b
ad
an
d d
elin
qu
en
cy a
t a
fo
ur
yea
r h
igh
, th
e h
ou
sin
g e
con
om
y is
no
w i
n t
rou
ble
,
thu
s th
e S
ub
pri
me
Cri
sis.
Of
cou
rse
, a
s w
ith
mo
st
cris
es,
th
e p
rob
lem
is
am
plif
ied
by
con
sum
er
pa
nic
an
d m
isin
form
ati
on
. H
op
efu
lly,
this
bo
okl
et
will
bri
ng
som
e u
sefu
l in
form
ati
on
to
lig
ht.
1.A
s re
port
ed in
the
Wal
l Str
eet J
ourn
al, M
arch
200
7.
17
Wha
t ar
e S
ubpr
ime
FIC
O
sco
res?
Th
e d
efi
nit
ion
of
Su
bp
rim
e s
core
s va
rie
s. I
n t
he
pre
vio
us
yea
rs t
ha
t I’
ve b
ee
n i
n t
he
bu
sin
ess
, 2
00
3
thro
ug
h 2
00
6,
you
co
uld
fin
d s
ub
pri
me
le
nd
ers
will
ing
to
ap
pro
ve l
oa
ns
on
cre
dit
sco
res
as
low
as
50
0 F
ICO
. To
da
y, d
uri
ng
th
is S
ub
pri
me
cri
sis,
a 6
59
FIC
O s
core
is
con
sid
ere
d w
ea
k b
y m
an
y S
ub
pri
me
len
de
rs.
Su
bp
rim
e l
en
de
rs a
re r
eq
uir
ing
a m
inim
um
66
0 m
id (
mid
dle
sco
re f
rom
th
e t
hre
e r
ep
ort
ing
ag
en
cie
s) F
ICO
sco
re,
an
d t
ha
t is
sti
ll su
bje
ct t
o
furt
he
r a
dju
stm
en
ts.
Tod
ay,
su
bp
rim
e F
ICO
sco
res
are
be
twe
en
66
0 -
70
0 F
ICO
. 7
00
+ F
ICO
sco
res
are
con
sid
ere
d A
pa
pe
r o
r g
oo
d c
red
it.
72
0+
is
con
sid
ere
d e
xce
llen
t cr
ed
it.
In o
rde
r to
su
rviv
e i
n t
he
rea
l e
sta
te i
nve
stm
en
t m
ark
et,
I e
nco
ura
ge
all
of
my
clie
nts
to
use
th
e i
nfo
rma
tio
n p
rovi
de
d o
n t
he
fre
e
cre
dit
re
pa
ir C
DR
OM
to
att
ain
hig
he
r F
ICO
sco
res.
18 Cha
pter
4:
Wha
t is
the
Su
bpri
me
Cri
sis?
Le
t’s
dis
cuss
th
e f
ollo
win
g e
lem
en
ts o
f th
e
sub
pri
me
cri
sis:
•“L
oan
Def
aults
” on
pag
e18
•“F
orce
d B
uy-B
acks
” on
pag
e22
•“I
nves
tor
Loan
Sal
es”
on p
age
23
•“I
nter
est R
ate
Ris
ks”
on p
age
23
•“H
ousi
ng p
rice
decl
ine”
on
page
25
Loa
n D
efau
ltsT
he
Su
bp
rim
e c
risi
s is
tri
gg
ere
d b
y th
e i
ncr
ea
sed
nu
mb
er
of
Su
bp
rim
e l
oa
ns
be
ing
de
fau
lte
d a
ga
inst
du
e t
o t
he
bo
rro
we
r in
ab
ility
to
pa
y th
e m
on
thly
mo
rtg
ag
e o
blig
ati
on
. S
tati
cally
, th
is i
ncr
ea
se i
n l
oa
n
de
fau
lts
can
be
tie
d d
ire
ctly
to
th
e S
ub
pri
me
le
nd
er
19
an
d b
orr
ow
er;
th
at
is t
o a
ce
rta
in r
an
ge
of
FIC
O
cre
dit
sco
res
wh
ich
are
co
nsi
de
red
su
bp
rim
e.
Th
ere
are
a s
eve
ral
issu
es
att
rib
ute
d t
o t
he
se d
efa
ult
s:
1T
he u
sage
of “
stat
ed in
com
e.”
To q
ualif
y bo
rrow
ers
for
subp
rime
loan
s, le
nder
s de
velo
ped
a st
anda
rd o
f acc
eptin
g in
com
e ba
sed
on
the
borr
ower
’s w
ord,
as
oppo
sed
to p
rove
n do
cum
en-
tatio
n, a
s lo
ng a
s th
e in
com
e w
as d
eem
ed r
easo
nabl
e fo
r th
eir
type
of e
mpl
oym
ent.
It m
ight
be
seen
as
lend
ers
softe
ned
the
loan
doc
umen
tatio
n re
quire
men
ts
and
allo
wed
loan
app
licat
ions
to b
e un
derw
ritte
n w
ith
stat
ed in
com
e on
the
wor
d of
the
borr
ower
in o
rder
to
gene
rate
mor
e lo
ans,
thus
mor
e m
oney
for
the
bank
s.
Stil
l, st
ated
inco
me
was
a v
alia
nt a
ttem
pt b
y th
e ba
nkin
g in
dust
ry to
cre
ate
oppo
rtun
ities
for
thos
e se
lf-em
ploy
ed
or s
easo
nally
em
ploy
ed p
oten
tial b
orro
wer
s w
ith
inco
me
that
they
cou
ld n
ot b
e ea
sily
doc
umen
t.
1T
he a
ccep
tanc
e of
100
% fi
nanc
ing.
One
of t
he m
ain
reas
ons
buye
rs c
ould
not
qua
lify
to
purc
hase
a h
ome
was
the
lack
of f
unds
for
the
20%
do
wn
paym
ent;
part
icul
arly
in C
alifo
rnia
whe
re h
ome
20
pric
es w
ere
so h
igh.
100
% fi
nanc
ing
beca
me
very
po
pula
r w
ith fi
rst t
ime
buye
rs a
nd a
llow
ed th
em to
get
in
to h
omes
whi
ch th
ey o
ther
wis
e w
ould
not
hav
e be
en
able
to q
ualif
y. T
he 1
00%
fina
ncin
g w
as s
plit
into
two
loan
s: a
80%
firs
t mor
tgag
e lo
an, a
nd a
20%
sec
ond
mor
tgag
e to
cov
er th
e do
wn
paym
ent (
whi
ch w
as
writ
ten
at a
hig
her
inte
rest
rat
e.)
The
com
bine
d m
onth
ly
paym
ent w
as s
ubst
antia
lly h
ighe
r th
an a
nor
mal
bo
rrow
er w
ho p
ut 2
0% d
own
and
only
had
the
one
loan
. P
art o
f the
pro
blem
her
e is
that
the
usua
l sta
ted
inco
me
borr
ower
typi
cally
foun
d it
diffi
cult
to m
ake
the
mon
thly
m
ortg
age
paym
ents
. With
hom
e va
lues
sta
biliz
ing,
or
in
som
e ca
ses
decr
easi
ng, s
trug
glin
g ho
me
owne
rs w
ere
seei
ng v
ery
little
equ
ity g
row
th a
nd/o
r in
cent
ive
to
cont
inue
to s
trug
gle
to m
ake
the
mon
thly
pay
men
ts.
Wal
king
aw
ay fr
om th
e lo
an b
ecam
e a
viab
le o
ptio
n si
nce
the
borr
ower
, put
ting
no m
oney
dow
n, h
ad v
ery
little
to lo
ose.
1O
ptio
n A
RM
S a
nd A
djus
tabl
e Lo
an R
ecas
t
Mos
t opt
ion
Adj
usta
ble
Rat
e M
ortg
age
(AR
M)
loan
s re
cast
afte
r 5
year
s or
whe
n th
e lo
an a
mou
nt r
each
ed
110%
- 1
25%
of t
he p
rope
rty
valu
e. W
hat h
appe
ns in
a
reca
st is
that
the
min
imum
pay
men
t opt
ion
(or
teas
er
21
rate
) di
sapp
ears
and
the
borr
ower
is n
ow fo
rced
to p
ay
the
AR
M r
ate
or to
day
whi
ch w
ould
be
abou
t 8.2
% A
PR
. S
o, fo
r ex
ampl
e, a
$50
0,00
0 op
tion
AR
M lo
an w
ith a
st
art r
ate
of 1
.0%
AP
R m
inim
um p
aym
ent w
ould
rec
ast
and
adju
st fr
om a
bout
$1,
614
per
mon
th to
a fu
lly
amor
tized
am
ount
of $
3,77
1 pe
r m
onth
. The
hug
e pa
ymen
t jum
p us
ually
cau
ses
paym
ent s
hock
and
fin
anci
al h
ards
hip
to th
e bo
rrow
er.
Op
tio
n A
RM
s ca
n b
e g
oo
d l
oa
ns
de
pe
nd
ing
on
th
e
ne
ed
s o
f th
e b
orr
ow
er.
Bo
rro
we
rs j
ust
mu
st b
e
pre
pa
red
to
re
fin
an
ce o
ut
of
the
se l
oa
ns
wh
en
th
e
tim
e c
om
es
to g
et
into
eit
he
r a
no
the
r m
inim
um
pa
yme
nt
loa
n o
r in
to a
lo
we
r fi
xed
ra
te o
f $
6.0
% o
r
so.
It i
s im
po
rta
nt
to u
nd
ers
tan
d h
ow
th
ese
op
tio
n
AR
Ms
wo
rk a
nd
ho
w t
he
eq
uit
y in
yo
ur
ho
me
is
eff
ect
ed
by
sele
ctin
g t
he
min
imu
m p
aym
en
t. I
giv
e
fre
e c
lien
t co
nsu
lta
tio
ns
on
op
tio
n A
RM
lo
an
s b
ase
d
on
yo
ur
spe
cifi
c n
ee
ds.
22 Fo
rced
Buy
-Bac
ksL
arg
e i
nve
stm
en
t b
an
ks a
nd
oth
er
inve
sto
rs a
re
tryi
ng
to
fo
rce
sm
all
mo
rtg
ag
e l
en
de
rs t
o b
uy
ba
ck
som
e o
f th
e s
am
e l
oa
ns
the
ba
nks
bo
ug
ht
fro
m t
he
m
in 2
00
5 a
nd
20
06
, b
y e
nfo
rcin
g w
ha
t th
e i
nd
ust
ry
calls
re
pu
rch
ase
ag
ree
me
nts
. T
he
re
pu
rch
ase
ag
ree
me
nt
is a
cla
use
in
clu
de
d i
n t
he
co
ntr
act
be
twe
en
th
e o
rig
ina
tin
g b
an
k a
nd
th
e b
an
k b
ein
g
sold
th
e l
oa
n w
hic
h a
llow
s th
e p
urc
ha
ser
of
the
se
loa
ns
to f
orc
e t
he
ori
gin
ati
ng
sm
alle
r b
an
k o
r
mo
rtg
ag
e l
en
de
r to
bu
y b
ack
“b
ad
” lo
an
s. A
lth
ou
gh
the
sp
eci
fics
va
ry f
rom
de
al
to d
ea
l, r
ep
urc
ha
se
ag
ree
me
nts
ob
liga
te t
he
mo
rtg
ag
e o
rig
ina
tor,
un
de
r
som
e c
ircu
mst
an
ces,
to
bu
y b
ack
a t
rou
ble
d l
oa
n
sold
to
a b
an
k o
r in
vest
or1
.Th
e p
rob
lem
is
tha
t m
an
y
loa
n o
rig
ina
tors
are
sa
yin
g t
he
y ca
n't
aff
ord
to
bu
y
ba
ck t
he
ir l
oa
ns
or
are
pu
rsu
ing
ba
nkr
up
tcy
pro
tect
ion
.Bo
rro
we
rs a
re s
till
resp
on
sib
le f
or
the
pa
yme
nt
in a
bu
y b
ack
.
1.R
epur
chas
e is
som
etim
es p
rom
pted
if
the
borr
ower
fai
ls t
om
ake
paym
ents
on
a lo
an w
ithin
the
firs
t few
mon
ths
or if
ther
ew
as fr
aud
invo
lved
in o
btai
ning
the
orig
inal
mor
tgag
e.
23
Inve
stor
Loa
n S
ales
Th
e B
loo
mb
erg
ne
ws
rep
ort
s th
at
som
e m
ort
ga
ge
len
de
rs/b
an
ks a
re r
ea
ctin
g t
o t
he
gre
ate
r ri
sk o
f lo
an
de
fau
lts
by
selli
ng
co
nsu
me
r m
ort
ga
ge
loa
ns
to o
the
r
inve
sto
rs a
t a
su
bst
an
tia
l d
isco
un
t. T
he
mo
rtg
ag
e
len
de
rs w
eig
h t
he
co
st o
f se
llin
g t
he
se l
oa
ns
at
a
dis
cou
nt
ag
ain
st t
he
im
pe
nd
ing
tre
nd
of
the
en
forc
em
en
t o
f th
e r
ep
urc
ha
se a
gre
em
en
t b
y la
rge
r
ba
nks
an
d i
nve
sto
rs w
hic
h w
ou
ld i
n m
ost
ca
ses
ba
nkr
up
t th
e s
ma
ller
len
de
r/b
an
k a
nd
pu
t th
em
ou
t o
f
ba
nk
com
ple
tely
.
Inte
rest
Ra
te R
isks
Ind
ust
ry a
na
lyst
s sa
y th
at
the
lo
we
r in
tere
st r
ate
we
’ve
exp
eri
en
ced
ove
r th
e p
ast
ye
ars
ha
ve b
ee
n
un
just
ifia
ble
fa
lse
ra
tes.
I’m
no
t su
re i
f th
e a
na
lyst
s
are
ta
lkin
g a
bo
ut
the
fix
ed
ra
tes
ran
gin
g f
rom
th
e
4.5
% A
nn
ua
l P
erc
en
tag
e R
ate
(A
PR
) to
th
e c
urr
en
t
6%
AP
R,
or
the
cre
ati
ve u
se o
f O
pti
on
Ad
just
ab
le
Ra
te M
ort
ga
ge
s (A
RM
s) w
hic
h a
llow
s b
orr
ow
ers
to
24 aff
ord
mo
re h
ou
se t
ha
n t
he
y n
orm
ally
wo
uld
be
ab
le
to a
ffo
rd b
y e
xch
an
gin
g (
or
usi
ng
up
) so
me
of
the
ir
eq
uit
y in
th
e h
ou
se f
or
low
er
(sta
rtin
g f
rom
.7
5%
),
mo
re m
an
ag
ea
ble
pa
yme
nts
usu
ally
fo
r a
fiv
e y
ea
r
pe
rio
d.
Th
ese
Op
tio
n A
RM
s w
hic
h c
on
tin
ue
to
fu
lfill
the
fin
an
cia
l n
ee
ds
of
ma
ny
bo
rro
we
rs,
Su
bp
rim
e
an
d A
Pa
pe
r, “
reca
st”
at
the
en
d o
f th
e f
ive
ye
ar
pe
rio
d (
or
ten
ye
ars
fo
r W
orl
d S
avi
ng
s B
an
k).
A
reca
st i
s w
he
re t
he
re
ma
inin
g l
oa
n a
mo
un
t is
am
ort
ize
d a
t th
e c
urr
en
t a
dju
sta
ble
an
nu
al
pe
rce
nta
ge
ra
te (
AP
R)
cau
sin
g t
he
mo
nth
ly p
aym
en
t
to i
ncr
ea
se,
for
exa
mp
le,
fro
m $
1,7
00
/mo
nth
to
$3
,20
0/m
on
thly
. B
orr
ow
ers
are
usu
ally
in
form
ed
ab
ou
t th
e r
eca
st p
roce
ss b
y th
eir
tru
ste
d l
oa
n
con
sult
an
t w
he
n d
iscu
ssin
g t
his
typ
e o
f lo
an
an
d
the
n a
dvi
sed
to
re
fin
an
ce p
rio
r to
th
e r
eca
st.
So
it
sho
uld
be
no
su
rpri
se..
. it
’s a
ctu
ally
so
me
thin
g y
ou
mo
nit
or
an
d p
lan
fo
r.
He
re i
s w
he
re t
he
cri
sis
exi
st:
if y
ou
are
ap
pro
ach
ing
th
e e
nd
of
you
r fi
ve y
ea
r o
pti
on
AR
M
pe
rio
d t
his
ye
ar,
wh
en
yo
u g
o t
o r
efi
na
nce
yo
ur
loa
n
into
a b
ett
er
mo
re s
uit
ab
le l
oa
n v
ers
us
the
re
cast
ed
25
am
ou
nt,
th
e n
ew
mo
re s
trin
ge
nt
Su
bp
rim
e l
oa
n
ap
pro
val
req
uir
em
en
ts m
igh
t ca
use
yo
ur
loa
n a
pp
li-
cati
on
to
be
de
clin
ed
. S
ho
uld
yo
u p
an
ic?
No
, yo
u
sho
uld
pla
n f
or
you
r n
ext
re
fin
an
ce.
Re
fer
to t
he
cre
dit
re
pa
ir s
ect
ion
ab
ove
to
ge
t yo
ur
cre
dit
re
ad
y
for
you
r n
ext
re
fin
an
ce.
Co
nti
nu
e t
o s
urv
ive
an
d
thri
ve i
n t
he
re
al
est
ate
in
vest
me
nt
ma
rke
t.
Hou
sing
pric
e d
eclin
eT
he
slo
win
g o
f re
al
est
ate
sa
les
an
d t
he
in
cre
ase
in i
nte
rest
ra
tes
ha
ve r
esu
lte
d i
n t
he
ab
un
da
nce
of
rea
l e
sta
te i
nve
nto
ry o
n t
he
ma
rke
t. I
t is
a b
uye
rs
ma
rke
t, n
ow
. T
he
sta
te o
f th
e r
ea
l e
sta
te m
ark
et
is
go
od
fo
r b
uye
rs;
no
t so
go
od
fo
r se
llers
.Th
e
con
sist
en
t o
verb
idd
ing
on
ho
me
lis
t p
rice
s a
nd
mu
ltip
le o
ffe
rs o
n a
sin
gle
lis
tin
g i
s ra
re.
Inve
nto
ry i
s
sta
yin
g o
n t
he
ma
rke
t fo
r lo
ng
er
pe
rio
ds
of
tim
e.
An
d
no
w,
the
va
lue
s in
pro
pe
rtie
s a
re s
tab
ilizi
ng
or
de
clin
ing
in
ord
er
to f
aci
lita
te q
uic
k sa
les.
As
gri
m a
s
it s
ee
ms
for
tho
se a
tte
mp
tin
g t
o s
ell
pro
pe
rtie
s a
t
26 this
tim
e,
it i
s a
go
od
tim
e f
or
firs
t ti
me
ho
me
ow
ne
rs
to g
et
in w
hile
va
lue
s a
re d
ow
n.
Th
e h
isto
rica
l
ma
rke
t tr
en
d s
ho
ws
tha
t p
rop
ert
ies
usu
ally
pic
k u
p
aft
er
a s
ha
ke u
p.
Th
ere
is
no
gu
ara
nte
e,
bu
t if
yo
u
do
n’t
ow
n p
rop
ert
y, i
t m
igh
t b
e w
ort
h t
he
ris
k to
be
com
e a
ho
me
ow
ne
r n
ow
.
27
Cha
pter
5:
Wha
t ty
pe o
f lo
an d
o I
have
?T
he
re a
re s
o m
an
y lo
an
pro
gra
ms
ava
ilab
le t
o
bo
rro
we
rs.
Th
is i
s w
hy
it i
s im
po
rta
nt
tha
t yo
u
cho
ose
a k
no
wle
dg
ea
ble
lo
an
co
nsu
lta
nt
to a
ssis
t
you
in
un
de
rsta
nd
ing
yo
ur
loa
n o
pti
on
s. I
f yo
u d
on
’t
kno
w w
ha
t ty
pe
of
loa
n y
ou
ha
ve,
I ca
n s
it w
ith
yo
u
to v
iew
yo
ur
loa
n p
ap
erw
ork
fro
m w
hic
he
ver
len
de
r
you
la
st u
sed
. I
can
he
lp y
ou
un
de
rsta
nd
wh
at
typ
e
of
loa
n y
ou
ha
ve,
the
ad
van
tag
es,
th
e d
isa
dva
n-
tag
es,
an
d w
he
the
r o
r n
ot
this
is
the
be
st l
oa
n
pro
gra
m f
or
you
r in
div
idu
al
circ
um
sta
nce
s. S
om
e
loa
n p
rog
ram
s in
clu
de
:
•30
-yea
r fix
ed
•40
-yea
r fix
ed
•50
-yea
r fix
ed
•In
tere
st O
nly
whe
re th
e pr
inci
pal r
emai
ns th
e sa
me
afte
r pa
ymen
ts
28 •fix
ed fo
r so
man
y ye
ars
then
con
vert
ing
to a
djus
tabl
e (i.
e., 2
/28:
fixe
d fo
r 2
year
s, a
djus
tabl
e fo
r 28
yea
rs; 3
/27;
4/
26; 5
/25.
)
•H
ybrid
: fix
ed w
ith o
ptio
n A
RM
for
5 ye
ars;
var
iabl
e re
mai
ning
25
year
s.
•O
ptio
n A
RM
for
5 (s
ome
10)
year
s w
ith 4
pay
men
ts
optio
ns: 1
) Te
aser
sta
rt r
ate,
2)
Inte
rest
Onl
y, 3
) 30
yea
r fu
lly a
mor
tized
, and
4)
15 y
ear
fully
am
ortiz
ed. F
or
exam
ple,
bas
ed o
n a
$500
,000
loan
:
Th
ere
are
ma
ny
oth
er
loa
n p
rog
ram
s a
vaila
ble
de
sig
ne
d t
o f
it t
he
ne
ed
s o
f th
e b
orr
ow
er.
Ta
ble
5-1
:O
pti
on
AR
M E
xam
ple
$5
00
,00
0In
tere
st
Ra
teM
on
thly
Sta
rt R
ate
1.5
0%
$1
,56
1.4
7
Inte
res
t O
nly
6.5
%$
2,7
08
.33
30
Ye
ar
Am
ort
ize
6.5
%$
2,8
71
.65
15
Ye
ar
Am
ort
ize
6.5
%$
3,9
88
.23
29
Cha
pter
6:
Wha
t ar
e m
y op
tion
s?I
am
ava
ilab
le f
or
fre
e l
oa
n c
on
sult
ati
on
to
lo
ok
at
exi
stin
g m
ort
ga
ge
typ
e a
nd
ma
ke a
pla
n-o
f-a
ctio
n
reco
mm
en
da
tio
n b
ase
d o
n y
ou
r sp
eci
fic
loa
n t
ype
an
d y
ou
r p
ers
on
al
ne
ed
s. S
om
e o
f th
e c
on
dit
ion
s w
e
will
co
nsi
de
r a
nd
dis
cuss
are
:
1H
ow is
you
r F
ICO
sco
re?
Wha
t can
we
do to
boo
st y
our
scor
es to
qua
lify
for
the
best
inte
rest
rat
es a
nd
prog
ram
s?
2Is
you
r ex
istin
g lo
an g
ood
for
you?
Doe
s it
met
you
r im
med
iate
fina
ncia
l nee
ds?
3Is
ther
e a
pre-
paym
ent p
enal
ty a
ssoc
iate
d w
ith y
our
loan
? If
so, h
ow lo
ng?
Is it
mor
e co
st e
ffect
ive
to
refin
ance
for
a be
tter
rate
and
pay
the
pre-
paym
ent
pena
lty o
r to
wai
t unt
il th
e pe
nalty
exp
ires
to ta
ke
adva
ntag
e of
low
er in
tere
st r
ates
?
4D
o yo
u ne
ed c
ash
out o
f you
r pr
oper
ty fo
r sp
ecia
l ev
ents
suc
h as
col
lege
tuiti
on, v
acat
ion,
inve
stm
ents
?
30 5H
ow m
uch
equi
ty d
o yo
u ha
ve in
you
r ho
me?
Afte
r cl
osin
g co
st, w
ill th
ere
be e
quity
rem
aini
ng in
you
r hom
e to
mak
e yo
ur c
omfo
rtab
le in
ref
inan
cing
?
6W
ith y
our
cred
it, w
ould
you
qua
lify
for
a 70
%, 8
0%,
90%
, or
95%
loan
-to-
valu
e of
you
r ho
me?
No
te:
The
re a
re le
nder
s/in
vest
ors
who
spe
cial
ize
in
lend
ing
to p
oor
cred
it ca
ndid
ates
: The
se a
re u
sual
ly c
alle
d ha
rd m
oney
loan
s. Y
ou c
an e
xpec
t to
pay
high
er in
tere
st
rate
s of
2%
or
abov
e of
nor
mal
rat
es a
nd y
ou w
ill b
e ch
arge
d, in
mos
t cas
e, v
ery
larg
e po
ints
(on
e po
int e
qual
s 1%
of t
he lo
an a
mou
nt.)
By
wor
king
toge
ther
, we
can
wor
k to
war
d be
tter
optio
ns th
an h
ard
mon
ey.
31
Cha
pter
7:
Wha
t ab
out
firs
t ti
me
hom
e bu
yers
?G
oo
d n
ew
s fo
r q
ua
lifie
d f
irst
tim
e h
om
e b
uye
rs.
I
am
a q
ua
lifie
d l
oa
n c
on
sult
an
t to
su
bm
it a
pp
lica
tio
ns
for
the
Ca
lHF
A f
irst
tim
e h
om
e b
uye
rs p
rog
ram
. T
his
is a
pro
gra
m d
esi
gn
ed
to
en
cou
rag
e a
nd
ass
ist
firs
t
tim
e h
om
e b
uye
rs.
A f
irst
tim
e h
om
e b
uye
r is
de
fin
ed
as
an
yon
e w
ho
has
no
t h
ad
pro
per
ty o
wn
ersh
ip w
ith
in t
he p
ast
th
ree
yea
rs.
Th
is p
rog
ram
off
ers
:
•D
own
paym
ent a
ssis
tanc
e of
$12
,500
.
•C
losi
ng c
ost o
r ad
ditio
n m
oney
tow
ard
dow
n pa
ymen
t of
3% o
f pur
chas
e pr
ice.
Tha
t is,
if th
e pr
oper
ty p
urch
ase
pric
e is
$50
0,00
0, a
n yo
u ca
n qu
alify
for
$15,
000.
32 •B
elow
mar
ket i
nter
est r
ate.
For
exa
mpl
e, if
the
goin
g in
tere
st r
ate
is 6
.5%
, you
qua
lify
at a
bout
5.5
%.
•Y
ou h
ave
a si
ngle
loan
. The
$12
,500
and
the
3% lo
ans
are
defe
rred
unt
il th
e ho
use
is s
old
or r
efin
ance
d at
a
futu
re d
ate.
Th
ere
are
so
me
qu
alif
yin
g r
eq
uir
em
en
t. T
he
am
ou
nt
of
mo
ne
y yo
u m
ake
de
term
ine
s th
e a
mo
un
t
of
ho
me
yo
u c
an
aff
ord
. T
he
min
imu
m F
ICO
is
64
0.
An
d y
ou
mu
st b
e a
ble
to
do
cum
en
t yo
ur
inco
me
wit
h
two
ye
ars
W2
/10
99
, e
tc.
Th
is i
s a
n e
xce
llen
t p
rog
ram
an
d I
am
lo
oki
ng
fo
r
pe
op
le t
o t
ake
ad
van
tag
e o
f th
is o
pp
ort
un
ity.
I a
m a
vaila
ble
fo
r fr
ee
co
nsu
lta
tio
ns
reg
ard
ing
th
is
firs
t ti
me
ho
me
bu
yer’
s p
rog
ram
.
33
Cha
pter
8:
Can
I p
urch
ase
a ho
me
from
a n
ew d
evel
-op
men
t?I
am
cu
rre
ntl
y w
ork
ing
wit
h t
he
KB
Ho
me
s (t
m)
bu
ilde
rs a
s a
bro
ker
pa
rtn
er
to p
re-q
ua
lify
bo
rro
we
rs t
o p
urc
ha
se i
n t
he
se
ne
w d
eve
lop
me
nt.
I a
m n
ow
he
lpin
g t
o q
ua
lify
bo
rro
we
rs f
or
the
Pa
cifi
c Te
rra
ce 2
an
d 3
be
dro
om
, 2
1/2
ba
thro
om
s, 2
ca
r g
ara
ge
ne
w t
ow
nh
om
e d
eve
l-
op
me
nt
in U
nio
n C
ity.
Th
ese
to
wn
ho
me
s a
re m
ult
i-
leve
l fr
om
1,2
03
to
1,6
75
sq
ua
re f
ee
t in
siz
e w
ith
exc
elle
nt
use
of
spa
ce.
Vis
it t
he
Pa
cifi
c Te
rra
ce
virt
ua
l to
ur
on
line
fro
m m
y w
eb
site
at
ww
w.b
ywe
b.n
et/
be
stm
on
ey
an
d t
he
n c
on
tact
me
to
arr
an
ge
to
go
se
e t
he
mo
de
ls.
As
a p
art
ne
r, I
will
acc
om
pa
ny
you
to
th
e o
ffic
e t
o v
iew
th
e m
od
els
.
I ca
n a
lso
pre
-qu
alif
y fo
r o
the
r K
B H
om
es
in o
the
r
are
as.
34 Cha
pter
9:
Wha
t do
I d
o ne
xt?
He
re a
re t
he
ste
ps
you
ne
ed
to
ta
ke:
1R
evie
w y
our
FIC
O c
redi
t sco
res
from
ww
w.m
yfic
o.co
m,
ww
w.fr
eecr
editr
epor
t.com
, ww
w.c
redi
trep
ort.c
om,
ww
w.fr
eecr
editr
epor
tinst
antly
.com
, etc
. or
cont
act m
e an
d I c
an r
un th
em a
t a c
ost o
f $20
. The
goa
l is
to g
et
your
cre
dit t
o 70
0+ in
pre
para
tion
for
your
pur
chas
e or
re
finan
ce.
2C
onta
ct G
wen
doly
n S
trin
ger
at S
RT
Fin
anci
al fo
r:
•a
FR
EE
com
plet
e lo
an c
heck
-up.
Eva
luat
ion
of th
e st
ate
of y
our
exis
ting
loan
and
rec
om-
men
datio
ns o
f any
act
ion,
if w
arra
nted
.
•F
ree,
no
oblig
atio
n, lo
an p
re q
ualif
icat
ion
•F
ree
first
tim
e ho
me
buye
r co
nsul
tatio
n fo
r in
divi
dual
s
•F
ree
real
est
ate
loan
sem
inar
s fo
r gr
oups
35
Gw
en
do
lyn
Str
ing
er,
MB
A,
MP
AD
RE
Lic
en
sed
Mo
rtg
ag
e C
on
sult
an
tN
ota
ry P
ub
lic
SR
T F
ina
nci
al
cell
(51
0)
96
5-8
74
3
efa
x (5
10
) 4
05
-84
96
gw
en
stri
ng
@sb
cglo
ba
l.n
et
ww
w.s
rtfi
na
nci
al.
com
KB
Ho
me
Bro
ker
Pa
rtn
er
Ca
lHF
A C
ert
ifie
d C
on
sult
an
t
