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Chicago Real Estate Blog - Details |
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Mortgage industry is policing itself
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Posted by: John S. Osga - 1/4/2008 10:51:55 AM
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It appears as though the embattled mortgage industry has been policing itself with regards to correcting the situation with the subprime meltdown.
Does anyone see any 'no money down', 'stated income', 'negative amoritization', '100% financing', 'teaser rate offers' or 'piggy back loans' in Chicagoland anymore?
We all got into the subprime mess based upon goofy mortgage terms. These mortgages were all well and good (and legal) while we had escalating home values because the borrowers could obtain equity loans to pay their mortgages and more. However, once home values started to decline and many people's ARMS started to reset, it created a mess. A mess that many think has just begun.
Fortunately, the mortgage industry has already begun the clean up - without the intervention of government. This is evidenced by tighter lending standards and many of the 'subprime' mortgage companies having gone out of business. Investors, who bought much of these defaulted loans, are smarter now as well. They are not so quick to jump into backing mortage securites as they once were.
Regardless of what the government decides to do, the mortgage industry has already started the clean up itself and deserves some credit for doing so.
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