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?