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What is causing all of the foreclosures in our country? Is it just affecting those who did not have a fixed rate mortgage?

I just need to know as I just went into a new mortgage in Dec 07. I am okay meeting my monthly payments, however, I’m just a little scared with the crisis in real estate.

5 Thoughts on Mortgage Crisis: What is the cause?
  1. Reply
    Kaytee P
    February 12, 2014 at 10:01 am

    Alot of the problems came from Mortgage companies giving mortgages to people who could not afford them or would normally not have been approved for them. Therefore, there are alot more people defaulting on their mortgages.

  2. Reply
    February 12, 2014 at 10:49 am

    its all over the news. Lots of reasons. Banks want to mortgage homes, want to find buyers for these home and don’t check income and people get in and don’t pay. Or its like me, I owe 125k on my mortgage, its worth 325k. I ask the bank for 200k and then I can’t pay the mortgage off at all. There are so many spins to the mortgage crisis its not even funny

  3. Reply
    February 12, 2014 at 10:54 am

    If you pay the mortgage the “crisis” won’t affect you. The only problem might be if you overpaid and you are upsidedown in your property and you try to get out too soon.

  4. Reply
    February 12, 2014 at 11:54 am

    This financial crisis was caused by poor leadership, poor oversight, and poor decisions.

    First, the banks decided to lend money to people who did not deserve to receive those loans because they were high credit risks, and they loaned them the money without requring significant down payments.

    Secondly, banks offered “adjustable rate mortgages”, which means that people could borrow money at lower introductory interest rates and then interest rates would reset to higher rates a couple of years down the road. (Well, people took a short-sighted view of this and forgot to figure whether or not they could afford the higher payments down the road).

    Thirdly, the people who borrowed the money did not do their homework in figuring out whether or not they could afford their current and future mortgage payments.

    Fourthly, banks, and borrowers believed that real estate prices would continue to rise. They are not, and now people are “upside down” in thier homes, meaning that they owe more on their houses than what they are worth.

    If you have a fixed rate mortage and you are able to meet your monthly obligations, you should rest easy, because it is very unlikely that the bank would make you refinance your home to a higher interest rate or anything like that. Just keep a job and make your payments and things should work out just fine.

  5. Reply
    February 12, 2014 at 11:55 am

    Some of the problem was created by unscrupulous Loan Officers squeezing unqualified borrowers into 2 yr. fixed programs that change to adjustable programs after 2yr fixed period. Which means their monthly payment adjusts even higher every 2- 6 months. Also high profile lenders, for example Countrywide, who qualified stated income investors with high ficos to buy properties in hopes of selling or renting out later.

    No income was verified and the income stated is usually inflated so borrower could qualify. Now with the falling market investors are sometime unable to rent or sell the property at true value. The problem this causes to most homebuyes is the temporary loss of value due to possible foreclosures in your close proximity which will lower your value. The effect would be you may have a problem refinancing or selling your home with true value.

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