As an mortgage loan officer, there is a lot more at work then the way outlined. Such as over inflation of house values, and over building of housing. Coupled with banks giving subprime loans to those who could never afford the payments, were pre-approved for way too much, and plain and outright wierd payment schedules. And the current Fed lowering interest rates, the fall of the dollar, and rising cost of oil, food, and living cost. All these were not induced by the second or third mortgage market.
Over a decade ago, econimist were predicting that the par rate given for a home loan would be in the double digits by this time. The Fed has tried to keep the rates low to prevent this from occuring and the housing market hot, since it is the largest market for investment. Therefore now the banks are not making their return on loans and cannot make up the difference due to foreclosures.
Over a decade ago, econimist were predicting that the par rate given for a home loan would be in the double digits by this time. The Fed has tried to keep the rates low to prevent this from occuring and the housing market hot, since it is the largest market for investment. Therefore now the banks are not making their return on loans and cannot make up the difference due to foreclosures.
Last edited by a moderator:
