do subprime loans exist for mortgages ?
according to credit karma, my credit score is close to 550. If I owned a bank, I would give mortgages to any credit score because its ZERO risks. If the borrower defaults, the bank gets the asset pledged as collateral. With a mortgage, that would be the house. Why would banks not loan when there is no risk and they get interest on the secured loan.
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If you owned a bank, you would be bankrupt within months.
Mortgage loans are not zero risk loans. If you borrow $100,000 to buy a house, and then the market falls 50%, you now have a house worth only $50,000, but you have to pay on $100,000. Then when you walk away, the bank has lost the difference, even if they are able to resell the house.
Do you want to know about this?
Look up articles on the subprime crisis about 15 years ago.
They don't want a bunch of houses to try to sell, they want their money.
You think there is ZERO risk in real estate? You are an absolute moron.
Let's say you loan 400k to someone to buy a house and they (or their tenants) completely trash the place. Or let their insurance lapse and burn it down. Or we have another housing crash and their house is now worth 150k less than what you loaned them. Good luck with your collateral.