Homeowners that had excellent credit scores of 840 – 850, as of September 2007, were facing foreclosure. This comes as somewhat of a surprise among all the ballyhoo that the foreclosure crisis was caused by banks lending money to borrowers with low credit scores. The default rate last September was equal to that of people with much lower credit scores. Credit scores by themselves are no sure bet that homeowner will be able to make the payments. The loans they did take out were for homes a king could live in – not what they could necessarily could afford.

Subprime loans, or ARMs, came down the pike with a big sign that read, “Choose Me! I’ll make you bunches of money!” to lenders and especially mortgage brokers who actually became richer from this type of loan. ARMs were aggressively peddled to borrowers whose payments were calculated using the option ARMs minimum payment chart instead of the actual full monthly payment amount. This guaranteed that the loans would be written.

Of course, the blame doesn’t stop there. Borrowers had stars in their eyes when they realized that lenders would give them a loan for that house-fit-for-a-king even though their credit wasn’t perfect, their income wasn’t enough, and their debt to payment ratio was ignored by the lender.

With people who couldn’t wait to buy a home that, they knew they could afford, greedy mortgage loan practices and practicians, and very little government oversight, the foreclosure rate is now up to 68% in this nation.

Where it will end, no one knows. But in the meantime, the type of bailout that Bush has pushed is reserved for those who live and work in the Ivory Tower – Wall Street. Our taxpayer money is going to feed the same machine that brought our economy to the brink of disaster. They tell us that if we just help the banks, the Big Boys, and the failing financial institutions, the benefits will eventually trickle down to those who are losing their lifetime security in jobs, savings accounts, and homes.

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This entry was posted on Monday, June 30th, 2008 at 3:02 pm and is filed under Mortgage Crisis. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.