Sub-prime mortgage loans in the United States be given to consumers who have the feasibility of credit less than adequate. One way to measure the feasibility of consumer credit is done by looking at credit score. System of KPR in the United States is very dependent on credit score issued by the company credit for what use such a method FiCO. For information, consumers have dapar FiCO score ranging from 300's 850 depending on the results of calculations performed by companies with a view ceridt score 5 main categories as below:
1. Payment history (35%)
2. Amounts owed (30%)
3. Length of credit history (15% 0
4. New credit (10%)
5. Types of credit used (10%).
Although changes periodically, the current average credit score for consumers in the United States ranged from 620. The lower credit score (FiCO <620), the less the feasibility of these consumers get KPR. Sub-prime mortgage borrower pay given to consumers who have FiCO score <620.
In addition to credit score, sub-prime mortgage loans can also be seen from several factors:
1. The high ratio of Loan to Value up to 100%
2. KPR collateral that does not meet the fundamental calculation of its value.
3. Excessive lengkapan KPR documentation (low-doc) or no verification of income (statutory income), the source of downpayment and work history.
4. The high Debt-to-Income (DTI) and Payment to Income (PTI)
Characteristics directly above the risk of international distributors, KPR. From one side, dikompensasikan Increasing risk with high interest rates and other special features. On the other hand, high interest rates caused a mampuan consumers to get KPR.
In this case, distributors, KPR create products that remain KPR mengkompensasikan high risk but can be perceived by consumers, at least to be able to dioriginasi.
Sub-prime mortgage loan products of the famous is 2 / 28 Arms. This type of KPR developed enough where almost covers 75% of the adjustable sub-prime mortgage loan dioriginasi. Product features the first two years fix rated the Teaser Rate and will be changed at the end of the year adjustable rate into the second and each following year.
The problem is channeling KPR in mengoriginasi KPR measuring consumers with the ability to use the Teaser Rate low. At KPR interest rate changes at the end of the second year into adjustable rate, monthly payment consumers can be increased drastically because the margin for consumers with high-risk profile can reach 300-500 basis points. This causes consumers who are less credit worthy cares to pay installments KPR, and then failed to pay.
In addition, the Predatory Lending practices done by the dealer KPR naughty. Dikibuli consumer segment over the various tactics such as deliberately give the number of loans with high interest rates high to consumers who clearly can not afford to pay. Be expected if there failed to pay the collateral will be execution and distributor KPR benefit from the sale of his house.
source http://www.detikfinance.com