What is all this about mortgages on the news?

konnor aiden · Joined: 14 Sep 2009 Posts: 18

During the housing boom of the last few years, lenders issued mortgages to many buyers who were stretching themselves financially to buy a home. To make it possible for the buyers to make the mortgage payments, the lenders issued adjustable rate mortgages on which the interest rate and monthly payments are very low during the first few years, then increase in future years requiring higher monthly payments on the mortgage. Many speculators bought houses with such loans in the hope of selling them for a higher price.

Now the housing market is in a slump, and a lot of the mortgages are hitting the time when monthly payments are increasing. Home buyers who cannot make the higher payments are having trouble selling their homes and many of the loans are going into default. That means that the banks that issued these mortgages now have to repossess the homes on which payments are not being made.

Mortgages are in the news now because the number of defaults and repossessions is much higher than normal, lenders are in financial difficulty getting study with houses that are not selling, and buyers are losing their homes because they cannot make the monthly payments.

Josh Harmatz · Joined: 08 Sep 2009 Posts: 18

This is great information. Also mortgage lenders are making it much more difficult to get a loan done these days. They do not want to take the same risk they did in the past.

MissLA · Joined: 20 Oct 2009 Posts: 10

Great post, yes we learned this at our college throughout my finances courses, people who couldn't pay for a house(loans) were getting loans. They were being approved in mass numbers even if it was obvious they couldn't pay. Probably because of commissions and unregulated markets. Closing loans is the only thing on the loan officers mind, if its approved, they get paid.

DanAronG · Joined: 17 Oct 2008 Posts: 103

Not all mortgage brokers were that irresponsible, and some of us wouldn't dream of recommending a mortgage that a client couldn't afford. And you also need to remember that nobody forced individuals to take these risks.

EricJ · Joined: 09 Jan 2009 Posts: 321 Location: New Jersey

In addition, the borrowers have to take responsibility for understanding what they can and cannot afford. They are adults and they are signing the documents. Those documents clearly spell out the terms of the loan.