Scrambling to make changes to lending practices

This article provides insight to how the Mortgage Companies are scrambling to make changes to lending practices. The combination of rising interest rates on Adjustable Rate Mortgages (ARM) and falling home values make it equally difficult for the home owner and their Lender. If someone defaulted on their mortgage payments five to ten years ago the Mortgage company could simply take the property back through the foreclosure process and resell it at a profit. The housing market was at an all time high and everyone was making money, the risks were small, and the focus was on generating new loans. The industry lost sight of the reality that home prices could not possibly continue to rise at record levels each year. Now the housing bubble has popped and the home values are declining all over the country with the exception of certain parts of the country that didn’t experience the “irrational exuberance” of the housing investment boom.
The real estate market followed the same path as the dot com explosion in the late 90’s. Investors didn’t look at core statistics they were caught up in speculation and making profits.
Today Mortgage Companies and home owners alike are suffering the consequences of this lack of foresight.
The government has stepped in to police and clean up the sub prime market. Lets hope it wasn’t too little too late.

- This is an excerpt from an article posted on examiner.com, by JEANNINE AVERSA – March 13, 2007 - “Late mortgage payments shot up to a 3 1/2-year high in the final quarter of last year and new foreclosures surged to a record high as borrowers with tarnished credit histories had trouble keeping up with their monthly payments.
The Mortgage Bankers Association, in its quarterly snapshot of the mortgage market released Tuesday, reported that the percentage of payments that were 30 or more days past due for all loans tracked jumped to 4.95 percent in the October-to-December quarter.
That marked a sharp rise from the third-quarter's delinquency rate of 4.67 percent and was the worst showing since the spring of 2003, when the late-payment rate climbed to 4.97 percent….” www.examiner.com