MoneyMatters101.com Home
Real Estate Information

20 Real Estate Terms
1031 Tax Exchange
A Home
An Appraisal
Are Homes To Big?
Attention Veterans!
Avoid Fraud
Best Investment
Buying A Home
Buying REOs
Buying Real Estate
Can You Qualify?
Cash vs Home Loan
Clear Title
Climate Change
Closing Costs
Disclosing Material Facts
Distressed Property
Drug Houses
Down Payments
Escrow Information
Escrow Terms
Get Pre-Approved
Fair Housing
First Time Buyer
Foreclosure Guide
Foreclosure Scams
Home Prices
Home Warranties
Home Worth
Housing Statistics
Increase Sale Value
Intentional Default
Interest Rates
Is Now The Time?
Loan Modification
Look For A Bargain
Making An Offer
Market Analysis
Mineral Rights
Overvalued Property
Preparing To Sale
Preparing To Buy
Pricing Your Home
Probate Properties
Property Appraiser
Real Estate
Real Estate Scams
Rental Profits
Revive Market
Security Systems
Sellers Guide
Sell First?
Selling Real Estate
Short Sale I
Short Sale II
Short Sale III
Single Households
Smart-Home Technology
State Agencies
The Housing Crisis I
The Housing Crisis II
You Flinch, You Lose


Email Us


Short Sales




The Housing Crisis (Who Is To Blame?)

The housing market has taken a nosedive, and in doing so, it has taken a hard hit on other segments of the economy, causing companies to start laying off workers, making it necessary for some to file for bankruptcy and others to go out of business completely, and causing the stock market to plummeted to lows that have not been seen since the great depression era of the 1920's and 30's.

The housing market is the engine that drives many segments of the economy. Many people don't realize the impact that it has on all of us and we tend to look at the real estate market as just another industry where people buy and sell homes. In reality, when the real estate market goes bad, it causes a ripple effect that stretches around the world.

One of the biggest questions centers around what happened. Why are so many people struggling with their mortgage payments and why was it that no one saw the collapse of the housing market as it was getting overburdened a few years ago? This is a valid, and very good question!

The reason there are such a large number of mortgage defaults and foreclosures is because both lenders and many borrowers got caught up in the greed of the time. Lenders started making huge amounts of money selling their loans in the secondary mortgage market. There are certain catch phrases that you hear about such as "securities" and "blocks of mortgages" that are bought and sold in major brokerage houses on Wall Street and other financial districts.

There were either limited or no oversights by the federal government to control dishonesty and greed, so lenders on Main Street were encouraged to make questionable, deceptive, and in many cases, illegal loans to keep the big money flowing.

During this period, you often heard the phrases "stated income loans," "no money down loans," "100% loans," "120% loans" and other phrases that made no sense to anyone but those who were promoting those types of loans, and many lenders actually encouraged borrowers to take on such risky mortgages.

With stated income loans, all a borrower had to do was "say" that he or she made enough money to qualify. Lenders approved them without checking employment or, in some cases, credit.

People were given adjustable rate mortgages, just low enough for them to make the payments the first year or so on the premise that they would get raises or better employment opportunities. Naturally, this didn't happen for many borrowers and they were stuck with an every increasing interest rate and rising house payments.

On Main Street, many lenders, loan officers, realtors, appraisers, escrow, and title companies realized that they could make huge amounts of money underwriting and selling those types of risky loan products and they went for it with total disregard to ethics and, in many cases, the law.

There is enough blame to go around, but there are certain people in government, and in big business, who should shoulder most of the blame. They caused the mess, they didn't control it, and they let it get out of hand.

About the author

John M. Roberts is the owner of John Roberts Realty located Rancho Belago, California. You may contact him at jrobertsrealty@yahoo.com.


Book of the Month

Book about investing

Advertise on MoneyMatters101.com

Ask a Real Estate Lawyer Online

We have partnered with JustAnswer so that you can get an answer ASAP.



Accessibility Policy| Terms Of Use| Privacy Policy| Advertise with Us| Contact Us

Use of this web site constitutes acceptance of the Terms of Use.

We are looking to create more mutually beneficial partnerships. If you are interested in partnering with MoneyMatters101.com, send us your proposal.


Link to MoneyMatters101.com