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Are you buried in debt? Are you constantly being harassed by creditors? Have you received a notice of foreclosure?

Filing for bankruptcy can help you put an end to all of these problems. At Jeff Field & Associates, our lawyers...


Foreclosure Blog Post

Mortgage Foreclosure Crisis

Who is to blame for the foreclosure crisis? The question comes down to did homeowners overreach and go beyond what they could afford or did banks prey on naive consumers?

In reality, no one party is to blame, but rather a combination of lenders, homebuyers and regulators. Nonetheless, lenders have pointed fingers at home buyers, and homebuyers have claimed that banks engaged in illegal loans and foreclosures.

The federal government wants people to buy houses. It sees home ownership as an important aspect of citizenship. People, of course, want to buy houses but the majority of the time cannot afford them without borrowing money. As a result, they ask a bank to lend them the money they need. In order to obtain a mortgage, consumers have to prove they have money, a consistent income and an ability to pay the loan back.

Part of the crisis was created because banks and mortgage companies were not responsibly reviewing people's credit and ability to pay mortgage loans.  They then issued mortgages to people who could not afford them. In some cases the banks, after issuing these "junk mortgages",  took the loans, pooled them together and securitize them. This means that they sell them on the market to investors. In some cases, investment banks or retail investors would also buy into these loans.  Ultimately people were unable to pay and defaulted on the loans.

Now, following the mortgage crisis, increased regulation makes mortgages very hard to get. The Federal Reserve Bank hopes that by keeping interest rates very low for the foreseeable future the housing market will recover.  Unfortunately, the housing market is likely to be slow to recover because of the increased regulation and large number of foreclosed homes owned by mortgage lenders.

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