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Mortgage crunch impact spreading like wildfire

Started by Reyed Mia (Apprentice, DIU), June 27, 2017, 09:02:35 PM

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Reyed Mia (Apprentice, DIU)

Mortgage crunch impact spreading like wildfire

The walls are bare, the closets are empty, and Connie and Timothy Pent and their two teenage children are living out of boxes as they wait for a dreaded knock at the door of their three-bedroom house in Ocala, Fla.

They've fallen behind in payments on their home loan, and their lender told them in July that foreclosure was imminent.

''We thought we were fine,'' said Connie regretfully. ''You never know.''

An increasing number of homeowners and prospective homeowners are getting caught up in the fast-spreading mortgage crisis that is claiming victims from all income levels and demographic groups. Like the Pents, many are trying desperately to get their loan terms reworked but are finding it's not possible in a tightened market.

For five years, the housing boom put money in the pockets of lenders, brokers, realtors and investors and granted easy mortgages to homeowners with both good and blemished credit. But as home prices decline and interest rates climb, the cracks in the housing market's foundation are widening.

Exotic mortgages, once hailed for helping to increase U.S. homeownership to its highest level at 68.9 percent, have become the undoing of an entire industry and, most heartwrenching, millions of homeowners.

Loans with adjustable rates, payment choices and loose requirements have trapped borrowers in too-high payments with few options for escape. Some have taken on second and third jobs, depleted savings, retirement and college funds and wrestled with lenders to stave off foreclosure. Those who fail see their homes sell to the highest bidder at an auction.

''The increasing availability of mortgages has been an important and positive long-term trend,'' said Doug Elmendorf, a Brookings Institution economist. ''But like many positive developments, this one was taken to an unjustifiable extreme.''

Many of the victims are subprime borrowers — those like the Pents who don't qualify for market interest rates because of blemishes on their credit record. The Center for Responsible Lending estimates that 2.2 million subprime home loans made in recent years have or soon will end in foreclosure.

http://helenair.com/business/mortgage-crunch-impact-spreading-like-wildfire/article_785e0f49-f194-57e9-8094-467c201a1185.html
Reyed Mia (Apprentice, DIU)
Asst. Administrative Officer and Apprentice
Daffodil International University
102/1, Shukrabad, Mirpur Road, Dhanmondi, Dhaka-1207.
Cell: +8801671-041005, +8801812-176600
Email: reyed.a@daffodilvarsity.edu.bd