Is the “Housing Crisis” as bad as some make it out to be?
Is seems to me that maybe some people bought more house than they could afford? Whose fault is that? Mine? The governments? Or the perosn that put their signature on the mortgae and loan documenst?
Here is a graph from the Mortgage Bankers Association:
What is pretty obvious is that subprime mortgages in general are not the problem, but subprime ARMs that are the real problem. Subprime fixed foreclosures in 2007-Q3 were actually below the last peak in 2003-Q4, and still aren’t much higher than FHA foreclosures. Foreclosures on prime fixed-rate mortgages haven’t moved much at all in the last 5 years.
Fortunately, subprime ARMs make up only 7% of the total mortgage loans outstanding according to the MBA, or about one out of every 14 loans, and of those subprime ARM loans outstanding, about 1 out 20 were in foreclosure in 2007-Q3, or about 1/3 of 1% of all mortgages.
So, because people with horrible credit – who can’t responsibly use a credit card let alone manage a piece of real estate – are being foreclosed on, my tax dollars should help bail them out? Give me a break. The lenders and the home owners need to accept the responibilty for the losses they must now incur.
More importantly, an unnatural housing bubble is being corrected.
30-Year Mortgage Rates Fall Close to A 4-Year Low – St. Louis Fed