WSJ on foreclosures: Zero money down, not subprime loans, led to the mortgage meltdown.
WSJ:
What is really behind the mushrooming rate of mortgage foreclosures since 2007? The evidence from a huge national database containing millions of individual loans strongly suggests that the single most important factor is whether the homeowner has negative equity in a house — that is, the balance of the mortgage is greater than the value of the house. This means that most government policies being discussed to remedy woes in the housing market are misdirected.
Many policy makers and ordinary people blame the rise of foreclosures squarely on subprime mortgage lenders who presumably misled borrowers into taking out complex loans at low initial interest rates. Those hapless individuals were then supposedly unable to make the higher monthly payments when their mortgage rates reset upwards.
Related Posts:
- Federal Reserve Bank of Cleveland: Ten Myths about Subprime Mortgages
- Wash Post — New round of foreclosures threatens housing market
- WSJ: Goldman Is Charged With Subprime Fraud
- Education Department Names 4 Lenders to Service Student Loans: Chronicle of Higher Ed
- Brian Riedl: BORROWING ‘TIL THE NATION BREAKS?
Tags: mortgage foreclosures
