Now What? FHA. That's What!
The "Subprime Meltdown" went ahead and wiped out many a mortgage lender. Those lenders were taking large risks and now have gone the way of a drunken gambler. Of course, what makes this situation much different is who gets affected. Sure they were taking risks, but they were taking risks on hard-working American families. The dream of homeownership has been stripped away from many.
But there is hope. There is the United States Government.
The Department of Housing and Urban Development is still steadfast in their support of the American people and their dreams. FHA loans make it possible for families to buy a home despite previous credit problems.
Sure, it's not as simple as it used to be. Those risky lenders were giving 100% financing to people with awful credit and outstanding collections, even judgements! FHA is a "story loan". They want to hear why you deserve a loan. If you've had previous credit problems, they want to see that you've taken steps to correct those problems. They also want to make sure that you'll be able to meet your payment obligations without a problem. For these reasons, they are tougher-to-get loans than the old Subprime's.
FHA gives you far more benefit than the Subprime loans of yore. (I'm not quite sure if that makes sense. Maybe.) FHA loans are backed by the Federal Government against default. That means the lender is guaranteed against losses, even if you fail to make payments on the house and the have to foreclose. This reduces the stress and risk of the Lenders substantially. They pass this risk reduction on to you as lower interest rates!
These loans offer a low rate and low down payment solution to families trying to realize the American Dream of homeownership.