Who is to Blame for the Mortgage Meltdown?

by Donald Hanz on Mortgage

The housing market in the United States is said to be in the throes of a major crisis. Last year, there were more than one million homes that entered foreclosure. Unfortunately, the number of foreclosure homes in the nation is forecasted to double or even triple in the next couple of years. Fingers have been pointing everywhere and no one really knows who is to blame.

Lenders

Many experts are pointing the finger to aggressive lenders who offered mortgage deals which are considered predatory. Borrowers during the most recent housing boom were not able to resist offers of “adjustable interests”, “no down payment” and “interest only” payments. Many lenders failed to explain to these borrowers that interest rates for these loans will be higher than standard rates. They also fail to explain the increases on mortgage payments when these interest rates reset after a couple of years. Many lenders did not even bother to find out whether or not bad credit borrower can pay for the loan. Unfortunately, most mortgage loans that went into default were subprime mortgages.

Legislation

Lending guidelines are now being scrutinizing especially when foreclosure filings increased in prosperous areas. Legislation are looking into reforms that will help both lenders and borrowers protect their interests. A closer look at the present mortgage laws showed very few provisions that could protect consumers from predatory lending practices and lenders from going bankrupt.

Borrowers

Although borrowers are the victims of the current housing market meltdown, they should also be partially responsible for losing their homes to foreclosure. Some of these borrowers took out loan amounts even if they are aware that will be over extending themselves. Some were not prepared for resetting interest rates and did not fully-understood the loan terms and conditions. Many borrowers also chose not to do anything about their situation when they started missing their monthly payments. Foreclosure experts like Bank Foreclosures Sale can actually provide these owners with helpful tips and advice.

disclaimer