Mortgage Industry Problems

Mortgages and home ownership play a large part in our economy.

There are many types of mortgages, but they all primarily have the same purpose. A mortgage is a type of loan, with the collateral being the house or property you are purchasing with the loan.

Mortgage Foreclosures

Foreclosures can lead to empty homes that the mortgage lender can't sell.

Unfortunately, one of the biggest issues in the United States is mortgage customers losing their homes to foreclosure. Since so many people are out of jobs, they can't afford to make their mortgage payments. Even those with jobs who need to move can't find buyers without reducing the price of the home.

Trouble for Banks

Foreclosure is bad for banks, too. Banks are losing money on home loans that go into foreclosure, and they face losing their mortgage customers as foreclosures increase and people shy away from taking out mortgages.

Foreclosed Home Resales

Banks are receiving many homes back due to foreclosures on sub-prime loans, but often they aren't able to resell the houses on the market to regain some of their losses. As prices continue to tumble, the foreclosure mess becomes more and more difficult to solve.

References

• Freddie Mac: What Is a Mortgage?
• "The New York Times'': Rising Default Rates Hitting Subprime Industry Hard; Vikas Bajaj and Julie Creswell, Feb. 22, 2007