The mortgage meltdown.
Most people don’t know that the government deregulated the mortgage business in the beginning of the sub-prime era. By doing this they allowed the banks to borrow at a ratio of 30 times there worth, instead of the regulated 10 to 1. This gave banks the opportunity to access billions more dollars than they ever had access to before. The scary thing is that the government said that they would still guarantee this money!
When it comes to the fault of this mess, it seems the media has portrayed the mortgage broker as the root of all evil. The banks have come out and tried to pass laws that would put mortgage brokers out of business. Because banks say that the brokers originated most of the faulty mortgages. The problem with that is, when a loan is originated from a mortgage broker it still gets sent to the bank for underwriting approval. So ultimately they were the one who approved the loans in the end.
Real Estate Agents didn’t help either, yet they some how seem to avoid most of the media. The business attracts a definite personality. If you sell a $350,000 home and make a minimum of $7000.00 commission on it, but sold 4 – 5 homes a month? That’s a lot of cash for not a lot of work and a lot of attitude. I’ve heard of so many Real Estate Agents that had there little goup of friends that they worked with exclusively to Fraudulently buy and sell homes and put millions of dollars into their pockets. But somehow these scenarios seam to keep out of mainstream media. Not all Real Estate Agents are bad, but the ones who are sure are messing it up for the ones who aren’t.
To sum things up.
First – it started with the Government deregulating the Banks
Second – it fell into the hands of Greedy Banks with unaccountable access to much $$
Third – Banks and their loose underwriting guidelines allowed unworthy people to qualify.
Fourth – Greedy and Under-educated consumers took mortgages that they didn’t but should’ve
Fifth – Unaccountable people who just want out of dis-equity in there homes walk away and
let their homes foreclose even though they really can afford the payments.
Finally – Fraudulent Real Estate Agents and Mortgage Loan Originators didn’t help. (a small
percentage of the foreclosures were cause by this.)
So in the end we are all to blame for the mess. We need to make sure that we educate ourselves about a product before we buy it, especially if it is the largest monetary transaction that we will do in our lifetimes. Don’t be a Pawn in life. Pick your own direction.