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Mortgage Lending Problems & Foreclosure Possibilities

Last Modified: 10/13/07
First Published: 08/24/07
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Views: 1224
For the last couple months there have been many articles written about the Mortgage Crisis in the United States. Poor-credit borrowers or non-traditional mortgages structures have allowed many people to purchase, but not necessarily afford their own homes.

In previous decades it would be assumed that many borrowers would not be able to acquire such mortgage packages, but with the rising availability of credit, and the lure of rising real estate prices, these “investments” seemed to be very good moves. Especially given that home ownership is perceived to be an American's destiny.

Now it is not too surprising that when the federal government fails to react fast enough state governors find it is the right time to step in with some type of appeal to their legislatures to bail out or in some way mitigate the problems their citizens might face. As Governor Mike Easley of North Carolina is doing now with his plan to limit the flexibility of brokers to charge rates that are above the market.

Given that this crisis is global, as evidenced by todays latest business section in the New York Times, apparently the United States is not the only one affected by these headlines. Chinese banks seem to be in for a few billion and Britain seems even worse off because their housing market still has rising prices. Now people in Britain are going for “buy backs”, selling their over-priced homes, only to try to buy them back from a third party. But the problem is that in some cases they are only getting 75% of the market price. Now if property prices continue to rise this seems like a good deal. But when they fall, and they will, they are going to have even more problems to show for their lust for home ownership.

So what should American state governors do to deal with this problem? Probably the best thing to do is stay out.

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