Quote:
Originally Posted by seattleflamer
This article is from 2008 from housing wire which definitely has a mortgage banking industry perspective (bias). The article explains the results of a study of defaults from 07 to 08. The subprime defaults exceeded prime defaults (no news there). But among the subprime borrowers, income had little relation to foreclosure. The highest correlation to forclosure was the type of mortgage product. The more predatory the terms, the higher likelhood of foreclosure.
So AFC-W is correct in the sense that lax lending practices by the banks lead to more foreclosures which is the bank's fault. They lent money to risky people.
I still contend that signing a contract has rights and obligations which just don't disappear because you don't like how it is working out for you.
www.housingwire.com/2008/10/29/foreclosure-rates-comparable-across-incomes-study-says |
My mortgage in essense says if I don't make the payments then the bank gets my house, ultimately I, as a home owner have only 2 obligations, pay the mortgage or vacate the house.
The Bank assumes my house's value will cover the mortgage, but I have no obligation to ensure that.
Banks used to ensure this by asking for a substantial downpayment, the idea for a downpayment isn't just to see if you can save money, it also adds a level of insurance for them to the deal, chances are even in a falling housing market they will be able to make up any losses if the price drops with part or all of the 20 or 25 percent you have put down. It used to be when the bank foreclosed you'd get 5 or 10 percent of the price back after the dust had settled that was left over from the deposit.
Banks decided to stop asking for a deposit to drum up more business though, by that one act they made this their mess and no one elses.