Did financial institutions fail to verify income and the ability to pay before they approved Mortgages?
Until recently, borrowers could simply state their income. Mortgage brokers would often “fix” the necessary documents to obtain a no income loan. This led to an alarming number of homeowners in houses that never should have qualified for.
Tags: ability, Approved, Before, fail, financial, Income, institutions, Mortgages, They, verify
so what is your point. Bill Clinton signed the bill into law and now we are all paying the price. It was all greed in the investment sector and since the loans were there many people bought more than they could afford and now are foreclosures. There are 3 C’s to lending and they need to be followed
It’s worse than that. They verified that the debt the person was about to incur was at or below 55% of their gross monthly income, whereas you cannot rent a house unless you earn 4x the rent.
Deregulating is not the problem; slimeballs are the problem. If we don’t tighten regulation we’ll see this thing fix itself with quality being monitored since the gov’t won’t monitor it for them.
And now everyone is paying for all those loans to people who could not pay.. What a joke! The USA banana Republic!
Unfortunately, banks that originated loans were not too concerned with borrower’s ability to pay because they would sell off the loans quickly. It ultimately ended up being financial “hot potato” because whoever is holding these loans now are becoming insolvent and sinking the banking industry. There is a moral hazard that exists to this day because originators are not holding the paper. Real income verification can solve this problem. This lack of regulation has caused default and foreclosures record high and lowered home prices in many states such as Florida, California. During the past 2 years these 2 states showed the highest default and foreclosure rates in the country.
It’s not a secret that a high percentage of people fudge their credit applications. If you want to learn more about how to fix this mortgage mess please click here to check out abilipay.com to learn what important Americans have to say about toughening income verification and the ability to pay for all home loans in the U.S.