Prime Rib and Subprime Lending

Well, if you have champagne taste while on a beer salary, you’re bound to find out how the two go hand in hand! There’s good news and then there’s some not-so-good news.

There were loans processors in Honolulu, like Home 123, that used to have offices around town and they used to process loans for borrowers who fell just below the prime level, or worse. Although they themselves did not service the loans, this particular loan processor was affiliated with, or maybe even a division of, New Century Financial Corporation.

New Century Financial was one of the hot topics on the financial radar when they began to slip into the abyss back in March of last year. Eventually New Century went into bankruptcy, relatively recently. What about Home 123? *Poof!* Gone. There was an office of at least ten or so employees, maybe more. They lost their jobs, obviously. The borrowers? Their loans are being serviced by another company acting as a collection agency of sorts and these borrowers will be fine as long as they keep their noses clean.

Did the sub-prime fiasco hit us? Yeah, it did. But, and here comes the good news, some “real” borrowers with only the best of intentions were able to have sub-prime lenders like Home 123 bail them out of financial distress and help them consolidate their debts by making loans to them even though their credit was in the tank.

Of course the interest rates were so exorbitant you might want to call it “bale” since most borrowers in that classification now have their financial hands bound like a “bale” of hay. At least, theoretically anyway, they can now better manage their monthly expenses. Those high-interest, monthly payments are what they are, but it’s still less for those who were dealing with credit card debt!

There are still sub-prime processors around so don’t panic yet. There are also places that will help you find someone who is willing to assist you with managing your finances. And, that includes loans for people with bad credit. You can always check to see if places you run into have a local connection. I know Countrywide has offices in Honolulu and what little I have heard about them has not been negative.

There is one word of caution when dealing with those organizations designed to help you deal with your creditors. If you enlist their assistance, that too will end up on your credit report. So, beware!

The best news? Well, I was told, because I’m nosy and I asked, that some lenders “don’t worry as much about loans made to Hawaii borrowers because Hawaii has a good payback record compared to other states.” Really?!?

As much as this whole thing was and is a terrible mess, and as touchy a topic as it has become, I am so proud of that statement! Okay, so we have people who overspend and we keep getting ourselves into credit-card debt, but at least we try to pay it back to the best of our ability!

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