Lenders provide the money to fund mortgage loans. But because so many fradulent
and high risk loans were funded we now have a mortgage crises, because a record
number of people are defaulting on their loans.
Mortgage Companies Are Going Out of Business.
Many of the largest mortgage companies in existence have gone out of business.
One such company was countrywide mortgage. They were bought out by one of their
creditors for pennies on the dollar, because they had one of the highest
default rates in the industry.
Mortgage Fraud Rings Took Advantage Of The Previous "Easy Mortgages"
Many fraud rings, from home flippers to fake real estate investors took
advantage of the historically easy-to-get mortgages. The "No Doc" or
"No Documentation" loan also referred to as the "liar loan", was widely used
deceptively to purchase and abandon properties all over the united states.
Fraud rings routinely took mortgage loans and used them as a personal piggy
bank. Some of them lived lavish lives instead of paying off the mortgage or
fixing up the home as promised.
A few months ago the justice department announced that they arrested several
lawyers, real estate agents, mortgage brokers, wall street bankers and,
others involved in illegal mortgage deals.
Adjustable Rate Option Arm Loans
Most people are naive and, simply believe that because someone is in business
they are doing an honest business. Because of this, some homeowners did not
read the 50 pages or so of documents they signed to get a loan. And,
because of this practice many honest, innocent people were duped into taking
loans that typically jumped from $1200 to $3500 in monthly payments in just
nine months or so.
Deregulation of the Industry
Just a few short years ago it was against the law to have a mortgage company,
a real estate company, and an appraisal company in the same office run by the
same people. The deregulation of the industry meant that is no longer true.
Unfortunately for the consumer, now many of these businesses work together,
in the same office, and some of them are in the same family, to dupe unsuspecting
Money is NOT Plentiful
Because of all the above, home loans are being defaulted on at an amazing rate,
something like one million in the past few years. Because of the defaults banks
are selling homes for much less than the loans owed on them. So, as you see money
is scarce, since banks are not getting the money back that they originally put
into the mortgages.
Because of all of the above, mortgage loans are hard to get. They are not impossible
to get, but they are hard to get. If you have an above average credit score, a reasonable
down payment, and a stable job and income, you could get a good mortgage. But, gone are
the days of the easy mortgage. So get financially savvy, so you can get a good mortgage,
as well as most other financial products.