Unfortunately many professionals in the subject of Economy, gave advise and tried to voice their loud opinion about the consequences of the accelerated appreciation of real estate and the flexibility of banks to approve loans- without much real number verifications – loans with variable interest or ARMS in which you put a small or no down payment and the difference in the total value of the property was complemented with a second loan with a much higher interest than the first one. As consequence to these actions, most of these loans – that owners have now stopped paying – had two principal clauses, one of variable interest and the second one with high adjustable interest on the same property.
In the real estate business, if a person buys a property and invests a sum of at least 3% of the total value as a down payment, is going to have a strong attachment of moral and psychological responsibility over the mortgage note and it is going to be much more difficult to stop or become delinquent on the monthly payments.
We have to considered that many people who bought their houses for the first time did not have much information on the matter, were first time buyers or ever though they would be able to afford having their own American dream.
The people who helped them process their mortgages were trained to sell the loan by utilizing any means necessary – even if they were aware they were committing fraud – with the motivation of pocketing a commission on the sale. The bigger the property value in play, the bigger the commission they’d earn (commission were as high as ten or eleven percent)
We could only blame the bank for their flexible loans, or only the real estate agents who were motivated by greed or only the loan officers that falsified documents or credit and work histories for fast-no-docs approvals and used deceased social security numbers to approve undocumented individuals.
We cannot forget that some new or old homeowners – with the help of the above mention individuals – bought not one but two or three or four and sometimes five properties as an “investment” and now as our economy crumbles they can not pay even one.
At the end, I believe that everyone that participated and contributed to the irresponsibly blowing and growing of the real estate bubble and which now – to sinners and not sinners – it has blown on our faces.
We are all very, very guilty.