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What happened with home loans                                                                                    

Posted at: Feb/02/2009 : Posted by: mel

Related Category: Economics,

I am all about ownership, and I feel the problem we are facing now is a result of a lack of ownership. For most of the last century a home mortgage was a partnership between the homebuyer and a bank. The buyer wanted the house and the bank was going to own the loan for many years so they had a vested interest in making sure the buyer was good for the loan. In the last 15 years or so we have crept away from this model with a mortgage industry that sold loans, then sold the paper. This took away the ownership on the lenders side since they were no longer vested in being sure the borrower was getting into something they could really handle for the long haul. In the short run this put more folks into homes because the loan vehicles allowed in the short run for people to buy more than they could afford in the long run.

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