Hello,
From henceforth I will be blogging everyday out of personal pleasure in order to help figure out this fiscal disaster called the Mortgage Crisis. Since late 2007 the mortgage industry has undergone a very tumultuous down swing due to bad lending practices and terrible risk assessment. Also the incentives for mortgage lenders at large mega-banks to write bad loans hasn't necessarily changed, and without reform of the system our population will quickly forget the troubles that occurred and in within a decade the same problem most likely will occur due to American greed.
The problem with the mortgage market isn't the original system that was established so people with the ability to repay a loan could buy a home younger and actual own the property so the money they put into builds equity and translates into personal wealth. Well with great rates and no regulation, the mortgage industry got soft and began writing massive amounts of loans to people that could not make payments, most often in cases where the homes were meant to be bought and then quickly sold at a profit. Well all the houses were overvalued and the people buying/selling the houses didn't have the ability to repay the loans, so when the house prices dropped because of the housing bubble bursting, lots of people had no way to repay loans. In the meantime all the companies writing loans bundled all the bad mortgages together into a financial derivative called CDOs or Collateralized Debt Obligations. When all the buyers/sellers defaulted on their loans the people who bought the "secure" CDOs lost billions of dollars, causing a huge cascading collapse of our financial system.
What will become of the mortgage industry next?
Current Mortgage Rates: 5%-7% for a 30 year fixed rate mortgage
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