Mortgage Mayhem
What’s happening in the mortgage industry today can only be described as financial disaster. Mortgage companies that specialize in lending money to customers with poor credit histories have done no favor to the economy on a personal level for individual families. On a larger scale, these companies are scrambling for financing and finding their own lines of credit cut.
When the housing boom was in full gear, an individual that had trouble making their high interest payments could either sell their property or refinance their mortgage. As the housing market slowed, home values declined and the borrowers were left owing more on their mortgages than their homes were worth.
Foreclosures have now hit an all time high. According to the Mortgage Bankers Association, the percentage of payments that were 30 days or more past due has jumped to 4.95 percent in the October to December quarter.
For the families faced with foreclosure, the results are devastating. Even if their credit histories were tarnished coming into the mortgage, they are now facing the loss of their home and possible bankruptcy. Counting payments or figuring payment info on a mortgage calculator should be everyone’s first step in figuring out what they can realistically afford on an ongoing basis.
New Century Financial Corporation, who is the nation’s second largest subprime lender, has stopped accepting all new loan applications. Until recently, they were able to package the loans up and sell them. This company’s stock has declined in the past month from $30 per share to $1.66 per share on March 12th.
As a result of the mortgage mayhem, some lawmakers are looking into setting higher standards to avoid risky, high interest mortgages which have been made to people with poor credit histories. Members of the housing coalition are hoping to work with the banks to refinance risky loans and help people avoid foreclosure.
