Interesting perspective on the current lending crisis in this country. While real estate agents are required to go to school, earn continuing education credits every year and adhere to strict rules, regulations and laws in order to keep their license, mortgage lenders and brokers have operated virtually unchecked. The article below outlines a perspective that aggressive lending tactics have caused our national mortgage and housing crisis.
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Borrowed from the Daily Real Estate News | January 16, 2008
Don’t Blame it on the ARMs
Aggressive lending is the real culprit behind high foreclosure rates — not just adjustable-rate mortgages, say many of those who are trying to analyze and cure the foreclosure problem.
"I blame the builders who needed to unload their product and the nonprofessional loan officers," says David Zugheri, co-founder of First Houston Mortgage in Houston. "Everybody was putting loans together just to get them sold. We were treating the housing market like a used-car lot."
While some states with high percentages of ARMs also have high levels of foreclosures, the two don’t necessarily go hand-in-hand. In Midwestern states where there have been high numbers of job losses and other economic troubles buyers are losing their homes because of old-fashioned economic hardship — not ARMs.
"It is certainly not out of the realm of possibility that even without resets some of the borrowers who took out these loans are ill-prescribed for homeownership," says Keith Gumbinger, vice-president of mortgage-research firm HSH Associates.
Here are the states with the highest and lowest percentage of ARMs.
10 States with the Highest Percentage of ARMs
- Nevada: 40.3 percent
- California: 38.2 percent
- District of Columbia: 33.2 percent
- Arizona: 32.1 percent
- Florida: 29.5 percent
- Colorado: 27.2 percent
- Washington: 24.5 percent
- Virginia: 23.6 percent
- Hawaii: 23.3 percent
- Illinois: 23.1 percent
10 States with the Lowest Percentage of ARMs
- Oklahoma: 9.6 percent
- South Dakota: 10.2 percent
- Arkansas: 10.4 percent
- North Dakota: 10.7 percent
- Nebraska: 11 percent
- Iowa: 11.6 percent
- Louisiana: 11.8 percent
- Wyoming: 12.1 percent
- Texas: 12.4 percent
- West Virginia: 12.5 percent
Source: BusinessWeek, Prashant Gopal (01/11/08)