We have all heard the criticism and negative consequences of the subprime sector and the relaxed guidelines many lenders used to approve loans over the last few years. However, I have not once seen a report on the news regarding the record levels of home ownership. The fact is, that more people own their home now than ever before, about 70% of Americans.
As shown in the cartoon on this blog, lenders can never escape criticism for their underwriting guidelines, they are either too strict or too lenient. Obviously many lenders went a little to far approving high risk loans, but I believe we have once again over reacted and many well deserving people will miss out on home ownership.
Consider this, many experts are stating that 20% of subprime loans are failing or will fail, that would mean that 80% are NOT. Even if their projections are off at worse we are still looking at a 70% success rate, not bad. These are people who otherwise would not have been able to purchase a house or would have lost their house in foreclosure due to a job loss or another life changing event.
I believe if we can approve our financial literacy and regulation in the mortgage industry, we can then afford to take chances on people and avoid the credit disaster we are in now.
Prosperity Financial - Your Mortgage Manager
Lafayette, Colorado
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