Question by Like a Date Palm Tree: What is the cuurent situation with banks and foreclosures?
I need to do a project on the current problems going on with banks and foreclosures, in general.

If you can also provide specific examples of this problem too.

Best answer:

Answer by Cali
Your question is a little vague but heres what i think your asking about..

People bought houses when the interest rates were wayyy low. Most on adjustable rate mortgages.. some 3 yrs some 5 yrs. Once those years were up, that rate of 2.75 or 3.75 that some people were getting.. doubled!!
Banks were giving loans based on peoples ability to pay for a overinflated house mortgage ( markets were doing good so house prices were up) with a low rate.
(Because of the low rates, people were buying bigger more expensive houses..) So a person that could only afford 100000 on a 6% rate could now afford a 200,000! ( for 3 or 5 years)with a 3 % loan rate. Banks were giving these loans out knowing people wouldnt be able to afford the new rates later!
When the 3 or 5 years were up, they could no longer afford their now doubled mortgage payments.
A 600 dollar loan is now 1200! 1200 now 2400!!

banks were giving no document loans to people. My banker told me to tell her what number i was comfortable with and she would make the loan happen. I was picking my price! They didnt care what i could pay as long as i said i could pay it.

no money down! this got banks into trouble and caused a drop in the markets when people lost their houses because the markets fell and houses where worth way less than what people still owed on them. This caused the banks to have financial problems because the money wasnt comming in from the people theyd given loans to so some banks needed bailed out.

This caused the markets to plumet more which helped lead to the economy issues at hand. This resulted in job losses, pay losses etc.
When people lost their jobs they could pay their mortgages. Someone people made deals with the banks to keep them in their houses while they looked for jobs therfore delaying foreclosures.

All this lead to where the markets are now.
The banks were forced to get rid of no doc loans and 100% financing.
Because of the foreclosure rates most people nees at least 3-5% down to buy and investors need at least 20% down. They are also red flagged and have more criteria in order to get a loan to buy a property for investment.

Foreclosures are all over the place now because of the above reasons.

Give your answer to this question below!

Popular Posts:

• Stocks Posting Sharp Losses In Early Afternoon Trading – U.S. Commentary
• TIer 5 Unemployment Extension Update 05/15/2010
• How does one qualify to receive the FED-ED unemployment insurance extension in California?
• NCESC Unemployment Benefits – www.ncesc.com « Breaking News
• How can i get money?I am a jobless person and don’t have any source of income with me.?

Related Posts:

• I want to specialize in foreclosures. Who would I speak with at the banks?
• once you sign your air force dep contract, what happens when they call with a job offer?
• What are some good seasonal winter jobs with room and board?
• Expect higher condo association fees be higher in complex with many foreclosures?
• What percentage of the purchase price do Foreclosures typically sell or auction for?