Better Ways to Borrow

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The subprime division of the mortgage market caters to people with less-than-perfect credit records. Foreclosures have skyrocketed in the past year due to a rise in the interest on adjustable rate mortgages, which left many subprime borrowers unable to make their payments.

Not surprisingly, the shakeout in the subprime loan market has forced many people to look for better ways to borrow. Federal Housing Administration loans, as well as mortgage loans established with community banks and housing advocacy groups, have proven to be savvy alternatives to conventional mortgages. And Islamic loans forbid the charging of interest. Intriguing.

So tell us: Have you used any of these alternative ways to borrow? How did they work?

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It is not the responsibility of the government to make sure everyone has a home. A home is a luxury not a right. If the private companies wish to destroy the home loan area, as they have started, and we as the individuals do not watch over them then the market should fall. And when we rebuild it, we will pay more attention.

As for an Islamic loan. This is a joke, sure every individual would love to not pay interest but this is how they make money. Americans do not want to rent to own. Its all about individuals and their private property. Also paying more for something than it is worth is no difference than a interest payment. You are paying more for something and that extra amount returns to the lender.

Sent by Chris | 2:26 PM | 11-12-2007

I have been getting into person-to-person lending. This hasn't gotten mainstream traction but is becoming more and more popular amongst lenders here in Silicon Valley.

http://www.prosper.com/referrals/borrower.aspx?referrer=dancurranjr

This is VERY similar to the Islamic Sharia lending laws, many people lending to one person, but instead of late payment charges and admin charges - there is interest.

Sent by Daniel Curran | 2:27 PM | 11-12-2007

The Islamic loan systems sounds a great deal like the Tong associations. Can you comment?

Sent by Cynthia Bullock | 2:34 PM | 11-12-2007

Are the Islamic loans available only to persons of the Islamic faith?

Sent by George M, AZ | 2:37 PM | 11-12-2007

I regularly use a source of credit that is little known in the U.S. and rarely used. Best of all, it comes with a VERY low interest rate.

I go to my savings account, withdraw funds when I need them, then pay the account back at my own schedule! Amazing!

Sent by Bruce Hilpert | 4:04 PM | 11-12-2007

I agree with Chris, there is nothing in the government's duties to insure anyone has a home.
Life, liberty (blessings thereof), pursuit of happiness, common defense, promoting the general welfare, YES! Housing for everyone, Nope! it's just NOT there.

The government does have a valid interest in seeing that nobody gets "ripped off". Hence, the "Truth in Lending Disclosure Statement" which is a REQUIRED form in EVERY "legitimate" loan agreement. Didn't read it? Too bad!

It shows, as clear as the words "total cost", how your $100,000 house is going to cost you (in excess of) $300,000 by the time you finish paying for it. People that have over-spent their means on a $400,000+ Mc-mansion don't get any sympathy me!

The consumer loan industry is a slave to YOU the (ever fickle) consumer.

As for the cultures that don't believe in (charging or paying) interest, Noble idea, poor practice.
Healthy economies depend on cash flow (from you, to me, to him, to her, and back to you). Hoarding lots of money (for decades?) to purchase a house, car, boat will REMOVE money from circulation. It actually makes people poorer.

Sent by Harold | 4:16 PM | 11-12-2007

Islamic loans are an outgrowth of Hebrew and Christian spirituality of centuries before. Even now Usury is a sin, though not as titillating as sex, and harder to blame on others.

Exodus 22: 24-25, "If you lend money to one of your poor neighbors among my people, you shall not act like an extortioner toward him by demanding interest from him."

Deuteronomy 15:1-11 orders the cancellation of all debts at the end of every seventh year.

James 5:1, "Next a word to you who are rich. Weep and wail over the miserable fate overtaking you: your riches ... will be evidence against you and consume your flesh like fire. ... You have lived on the land in wanton luxury, gorging yourselves ??? and on the day appointed for your slaughter."

Matthew 19: 21-24: "If you wish to be perfect, go, sell what you have and give to the poor, and you will have treasure in heaven. Then come, follow me. ... Amen, I say to you, it will be hard for one who is rich to enter the kingdom of heaven. Again I say to you, it is easier for a camel to pass through the eye of a needle than for one who is rich to enter the kingdom of God."

Sent by Monk-in-Training | 7:24 PM | 11-12-2007

Reverse Mortgage information given was incorrect. The Bank does NOT own the home at the end (unless there is a rare deal with the bank to do so). AND, FHA IS involved with most reverse mortgages (the very popular HECM loan). Suggest contact NRMLA president PETER BELL to get the correct story.

Sent by Monnie Elliott | 12:36 PM | 11-13-2007

Islamic financing: The description given by the guest was confusing. If I understand correctly it seems exactly like paying interest if you are going to overprice something. Seems like a lame why to bypass Islamic principles.

Sent by mizjellybean | 11:12 PM | 11-13-2007