Most of the home loan failures in the U.S. so far, have been connected to mortgages taken out between 2004 and 2008, which was the peak of the so called "housing bubble". In October 2007, the U.S. Secretary of the Treasury called the bursting housing bubble "the most significant risk to our economy."
A study released November 17th, 2011 by the non profit group- "Center for Responsible Lending" - points to predatory lending, and sub-prime mortgages as the main factor. The report-“Lost Ground, 2011” is based on an analysis of 27 million mortgages made over a five-year period. Some of the findings in their study indicate::
--The nation is not even halfway through the foreclosure crisis. 6.4% of mortgages taken out between 2004 and 2008 have ended in foreclosure, and an additional 8.3 percent are at immediate, serious risk.
--Foreclosure patterns are strongly linked with patterns of risky lending. Foreclosure rates are consistently worse for borrowers who received high-risk loan products that were aggressively marketed before the housing crash.
--The majority of people affected by foreclosures have been white families, but borrowers of color were more than twice as likely to lose their home as white households..
The worst of this crisis is yet to come here in the Pacific Northwest, with many more financially strapped bowwers in the foreclosure pipeline, than those who have already lost their homes, according to spokesman Paul Leonard with CRL. Some homeowners "are like glorified renters these days, making monthly payments while building no equity" in their investment, Leonard said.
The long range solution for borrowers in trouble, according to the CRL study; lenders have to stop "loan servicing abuses" and they need to get serious about manageable loan modifications.