With The Foreclosure Crisis Raging House Owners Cannot Sell Property To Save Themselves

July 16th, 2008

Just a few years back trading in property was in vogue. Houses were used like ATM cards – not as a nest or home – a place for rest and shelter.

Vicki Miller is one of the many affected by the shifting sands. She bought her house in Altoona by taking the help of a comfortable conventional mortgage. But seven years hence her debt has nearly doubled and her equity (that had been quite significant at one time) had shrunk to naught. To make matters worse she is lagging behind in monthly payments. The lender is threatening her with foreclosure. All her dreams are dashed. She and her sons have grown up here and she wanted her grandchildren too to grow up here. But that is not to be. She had been persuaded twice to refinance her mortgage into sub-prime loans. At that time she did not understand its implications. Today she is learning the hard way.

Analysts opine that the problem emanated from first time house buyers who over reached themselves and moved in to houses they could ill afford. According to statistics 90% of the people who opted for sub-prime loans during 1998 to 2006 were already house owners at that time. They had no need to stretch out for more. Many like Miller were comfortably off in their prime loan zones. By refinancing without understanding they walked into troubled waters. The loan papers were intentionally kept fuzzy to trap the unwary. The result is that thousands are in the same boat as Miller.

Lawmakers pondering over a mortgage rescue bill are carefully seeing to it that the greedy flippers are not rewarded and the truly needy are benefited. By grabbing easy loans many started leading fabulous life styles well beyond their means. In such a situation it is inevitable that foreclosures walk in. Many like Miller needed money and could not resist responding to aggressive advertising peddling refinancing through the sub-prime route. The majority of the loans are refinancing ones. There are elderly people who have tried to fix up their residences. They were lured by low monthly payments and debt consolidation without realizing at what risk they were endangering the very roof above their heads.

The sub-prime loans hit the market with the laudable purpose of helping people who could not avail of prime loans to own houses. Unfortunately the whole plan went awry.