A few years ago, there were several sub-prime mortgage defaults. People lied about their income in order to get a loan. The loan brokers in many instances did not even bother to verify their income, did not require down payments, and eventually made some very bad loans that really could never be paid back. Through the greed of the loan broker, many of these loans were entered into through deceptive practices. The individuals receiving the money, through their own greed, went recklessly into debt. A typical story comes from the city of Cleveland. They have made the foreclosure problems worse and have lost millions in tax dollars by helping people buy homes they could not afford. The city provided down payment loans of up to $20,000 to mostly low-income buyers. This was through the federal Afford-A-Home program. This program did little to determine whether the people actually had the financial means to afford staying in their homes. Things remained unstable because banks where mandated to make loans to unqualified borrowers under the federal program; or face problems with regulators.
Another cause was there were speculators who wanted to “flip” houses. Many would buy a house and property using easily accessible, sub-prime loans or with favorable adjustable rate mortgages, update some of the facilities, and then sell the property for a profit. The speculator would make a profit, the banking ins...
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...s like iodine. A little bit is vital for the body to function properly. Too much iodine is poisonous and will make you very sick or kill you. Debt is a useful tool. A little bit of it is vital for people to be able finance the necessary things they could not afford if they had to pay for it all at once. However, too much debt will destroy everything you have worked for. There is always a price to pay for excessive debt.
Despite all the problems, there are opportunities for responsible individuals to benefit from these bad mortgages. Foreclosure.com looks like an excellent way for these individuals to locate the distressed properties and mortgages that need to be obtained. The risk taking, creativity of these individuals will eventually solve the crisis. The sooner we can get this mess cleaned up and get the economy moving, the better off we will all be.
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