 Free Online Articles Directory |
||||||||
Home Page  Finance Mortgage Three Barriers to Solving the Mortgage Crisis |
||||||||
 |
Three Barriers to Solving the Mortgage Crisis
 In late 2006 the economy was showing indicators that pointed to a looming mortgage crisis that would ultimately disrupt the flow of business in the secondary market. Investors, who are essential to the flow of money, basically ignored the warning signs but began trading more cautiously. What they ignored was the “perfect storm” as it relates to our secondary mortgage market. The housing bubble burst, sub-prime loans began adjusting, investors stopped trading, and mortgage companies were left holding mortgages that were not worth what they paid for them. A by-product of the housing boom was an addiction to credit largely funded by the rising equity in our homes. A large portion of our economy was deeply invested in this boom. The chain of industries that profited from and helped propagate the boom is endless: builders, real estate brokers, investors, appraisers, surveyors, paint stores, home supply chains, lumber companies, marketing companies, architects and of course mortgage companies. In a financial game of musical chairs it was the mortgage companies who were the ones left standing. The mortgage companies, fueled by their own greed and an economy that demands the continuous flow of goods and services, invented new ways to “move money” to a larger segment of the public. As competition between banks escalated, new lending products were invented to capture a larger share of this market until they were basically handing out loans to anyone that could fog a mirror. Banks, who had an endless supply of money via their investors on Wall Street, sold the loans for a profit only to reload to do it again. The problem was that these loans were ticking time-bombs with short fuses, each dependant on rising house values. As we all know that ship has sailed, leaving our economy in shambles in its wake. The problem that we are faced with is not “who’s to blame”, but rather, who can fix it. The most obvious answer is our legislative group and the banking industry. Unfortunately, those who would be involved with the recovery have either a political agenda or are just trying to stay afloat but it is the public that’s suffering. The writers at Lendfast.com, a nationwide home loan services company, have come up with what they feel are the three main reasons we can’t solve the current mortgage crisis: 1) Politics – In an election year, neither side is willing concede a point of view that could possibly allow the other side to claim victory in solving the crisis. The “haggling” approach to passing legislation allows each side to claim victory on the local news; however the “local news” in an election year is now the national news. If a bill is passed, it is likely to be an ineffective and will have to be revisited in the future by the judicial branch. 2) Lobbyists – Legislators are supposed to be representing their constituents, meanwhile the lobbyists are representing the banking industry. Throw millions of dollars into the equation and a hand-full of representatives that spell mortgage c-o-u-n-t-r-y-w-i-d-e and the chances of getting real help for the “average Joe” is either impossible or a long time away. 3) “Baby with the Bath-water” – It is almost certain that a bill will pass this year, and as mentioned earlier it will probably be ineffective or an over-regulated nightmare. It is politically convenient to punish the “unscrupulous” lenders by enforcing regulations that sound good on paper. However, like most people, the extent of most legislators’ knowledge of the mortgage industry was learned at the closing table. It is pointless to pass regulations that restrict banks from lending money to the very community they’re trying to help. America must solve this crisis by holding our representatives in Washington accountable for their actions or lack of actions. There is one advantage to the election year, and that is we get to vote. We can throw the “babies out with the bath-water” as well. If you want real change look past Democrats or Republicans and vote for the best candidate to help you.
Rate this Article:
Current: 0 / 5 stars - 0 vote(s).
Article Tags: Mortgage Crisis, Subprime Mortgage Crisis, Impact Of The Subprime Mortgage Crisis, Banks Loss In Mortgage Crisis Article Source: http://www.articlesbase.com/mortgage-articles/three-barriers-to-solving-the-mortgage-crisis-458990.html About the Author:
Aubrey Clark is a syndicated writer and the managing editor for lendfast.com, a nationwide home loan services company,and Direct Banc. His expertise ranges from mortgage advocacy to helping people find good credit cards for fair credit. He lives and works in Atlanta Georgia with his wife and four children.
Related ArticlesSubprime Mortgage Crisis – Why Can't Lenders Just Fix the Bad Loans and Move On? Subprime Mortgage Crisis; Democrats Want Too Much and Republicans Want Too Little It’s the Income, Stupid. Thoughts on Fixing the Subprime Mortgage Crisis Mortgage Crisis – the Crooked Predatory Lenders Whats 2 Trillion Dollars Anyway Myth Vs. Fact Helping Homeowners – Another Perspective Myth vs. Fact Helping Homeowners - Another Perspective Top Ways to Benefit From the Current Mortgage Crisis Got a Question? Ask.Ask the community a question about this article:Q&A Powered by:
 Latest Mortgage ArticlesBad Credit Commercial Mortgage – “the Parties Over” Earn Money By Checking Your Mortgage Refinance Rates Types of Home Mortgage Loan That You Should be Aware Fixed Rate Mortgages Hold Steady Again While Arms Nudge Down How to Find The Best Lender To Be Able To Refinance Mortgage Rates Consider Five "r’s" When Looking for Ideal Mortgage Broker Foreclosure Costs Pros and Cons of the Deed in Lieu of Foreclosure More from Aubrey ClarkUsing a Credit Card for Rebuilding Credit Mortgage Brokers are Needed More Than Ever Is the Credit Cardholder's Bill of Rights Good for You? How to Spot Mortgage Fraud 5 Credit Bureau Repair Tips Credit Cards - Two Cycle Billing and the Disappearing Grace Period Low Interest Rate Credit Cards and How They Differ Average Credit Cards With Great Rates |
|
||||||
|
Article Categories
|
||||||||
 Sign up for our email newsletterReceive updates, enter your email below
Use of this web site constitutes acceptance of the Terms Of Use and Privacy Policy | User published content is licensed under a Creative Commons License.
Copyright © 2005-2008 Free Articles by ArticlesBase.com, All rights reserved. (0.21, 17) |
||||||||
How do I know this? Well, as it turns out I worked for the mortgage industry until Sept. of 2004 and noted that the types of mortgage "products" being peddled by lenders were just shy of outright theft. They set people up in deals that they knew would lead to forclosure, meanwhile raking in billions.
Then comes bankruptcy reform (interesting timing considering what the lenders were up to behind the scenes) to ensure that all of those unsuspecting customers saddled with these horrific "products" would not be able to tunnel their way out from under.
All the while mortgage brokers, being unregulated and all, could do or say anything they wanted in order to snare unsuspecting consumers and funnel them into line of credit mortgages with variable interest rates while rates were still unimaginably low: failing to inform their customers of the type of loan they were getting, misquoting rates and monthly payments, and if questioned telling borrowers that they could always refinance if the payments got to be too much (of course only after the fact and during CLOSING).
Really? And who (facing foreclosure) is able to refinance now? Not only were the brokers lying to consumers, but my particular mortgage lender made sure that rarely a closing document or note/loan agreement was seen until the poor saps were comfortably seating at the closing table (it was in fact a standard practice to NOT ship our documents until the night before via UPS and with terrible mistakes to boot)... by then, there's no way out of the deal without forfeiting plenty in earnest money and fees. I had thought that the racket was unethical then, but to see the result is just sickening. And now what to do with all of those foreclosed homes. Why, resell them... after all, the previous owners have already paid years into interest and fees.
So now that it's come back to bite them in the u-know-what, the lenders want the government to bail them out (as is happening). Thus, the rich get richer while the poor get evicted. Now tell me that all of this wasn't orchestrated and that nobody saw it coming!