Industry NewsMortgage

New mortgage products a game of risk

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CHARLOTTE, N.C. -- If the real estate loan industry were a fashion runway, the latest spring line-up would feature 40- and 50-year mortgages with a splash of no-interest and option adjustable-rate loans. These new types of mortgages are fashionable on many of today's home buyers, but what will they look like after going through a wash cycle of higher interest rates and receding home-price growth? Statewide Bankcorp, a lender based in Rancho Cucamonga, Calif., in March started offering a 50-year mortgage loan to California borrowers, generating a lot of industry buzz and stirring debate about potential risk for rising foreclosures among nontraditional mortgage borrowers. "The mortgage business is becoming a fashion trend," said Anthony Hsieh, president of online home-lending network LendingTree.com, referring to the recent launch of 40-year and 50-year fixed-rate mortgages and other new loan products. It's as if companies are rolling out the new styles each season to get the attention...