Subprime Mortgages: The American Dream
Vivian Norris de Montaigu on subprime mortgages:
And that is exactly the problem, the money is not really there, it is tied up in your neighbor’s home and someone else’s home. And if your neighbor cannot pay back, or you cannot pay back, the entire system suffers. The problem is that trust was not part of this sub-prime equation once someone greedy got their hands on it. In the beginning, the idea was to actually help people build up equity, therefore strengthen the economy, by buying their own homes. Mortgage companies do not want everyone’s homes back, they want to sell homes. Many people in the business were actually excited that people who normally would not get access to money to purchase a home, could end up doing so and making monthly payments that were less than rent to a faraway landlord. Because one way you begin to touch the American Dream is by building up equity, and it was not those who took subprime loans who ruined the deal, it was the speculators who used cheap money to flip real estate. They were not investing in homes for their families, they were trying to make a fast buck. But both sides lose, when the borrower does not understand the contract he or she is signing, or no one factors into the borrowing equation the higher monthly payment of an arm.
Posted: 26th, December 2007 | In: Reviews Comment | TrackBack | Permalink
