by Tricia
One of my wonderful readers sent me the following article on Yahoo, Foreclosures rising among high-risk US mortgages. Reading a story like this makes me feel sick in my stomach and so glad we went with a traditional 30-year fixed interest rate mortgage instead of an adjustable rate mortgage (which the second bank we went to tried to sell us).
Basically, a large number of homeowners now have adjustable rate mortgages that they can no longer afford. They were able to get the mortgages because of lenders sometimes were not even requesting proof that borrowers could pay back the loan. At the time of getting the mortgage, the interest rate was more manageable. Then, when it came time for a new interest rate, some homeowners’ monthly payments increased and some even doubled.
Why would a lender to that?
I think it’s summed up quite well here, taken from the article:
“Wall Street wanted the mortgage brokers to keep making loans even though they were riskier and riskier,” says Ira Rheingold, executive director of the National Association of Consumer Advocates in Washington, D.C. “They didn’t care that … people were getting loans they couldn’t afford because there was so much money to be made.”
We all want to make money, but at what cost?
I doubt if mortgage lenders care these days , it’s all about the money. Now they have 50 year mortgages, I almost passed out when I heard it.
I also think that mortgage brokers and lenders got caught up in irrational exuberance over the real estate. Just as regular folks got caught up in rapidly rising home prices, so did the lenders. They’re human, too. But now that the market is softening, and in some places dropping like a rock, we see lenders tightening loan requirements.
And then you just have the predatory lenders who are only out to make a quick buck and don’t really care about home buyer. Blech.