Subprime Mortgage Lender Shares The Inside Story
Though I have been aware of the problems with the subprime mortgage industry all along, this article really hit home! It underlines what a total, unregulated mess it was back in the “boom ” years.
Since I specialize in short sales in Maricopa Arizona, I hear first hand from homeowners about what has caused their distressed situation. Everyone has a different story and fortunately I have not come across any quite as bad as described in this article. But, without a doubt, I have seen way too gigantic HELOCs that have someimes approached the original amount the owners paid for their home. I also remember receiving at least a half dozen solicitations a week, some offering as much as 125% of my home value in “cash”.
Predatory lending was a major problem back then and there are still signs of it today. Whenever I hear one of my mortgage broker friends complain about all of the new regulations I just shake my head. The industry was completely unregulated and, since they did nothing about it themselves, someone had to step in. My only concern is that they did not extend the requirements to employees of the large financial institutions. Special interest groups took care of that.
Without a doubt, it is much more difficult to obtain a mortgage these days. You actually need some proof of income! That being said, I am still concerned that greed will ultimately kick in and policies will be realxed. I have already seen a few cases of this with new home builders.In most cases, they control the whole process (including the lending) and I have no doubt that their desperation on these troubled times have caused them to push the envelope at times.
I certainly do not blame the subprime mortage industry for the housing crash. There is plenty of blame to go around: our Government; Wall Street; investment firms, special interest groups and, of course, the buyers themselves. I only hope that all concerned have learned something!
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