They call them predator mortgage lenders. The loans offered and the payments stated misled many to sign on to situations they did not fully understand. We all heard the offers of lowered payments and zero down.
Mortgages to low income families were been highly encouraged since the late 1970s. During Clinton more teeth were put into the encouragement. Lenders were told to lend to the poor.
These bad papers were bundled and sold to the likes of Freddy Mac and Fannie Mae. They were bundled with better notes to plump up the value.
We all know supply and demand drives commerce. It drives housing as well. More $ was available. Qualifications were lowered. People took out equity to buy cars, take vacations, make home improvements, and pay for college. Taking out equity equals another mortgage or a restructured higher mortgage. Real estate values climbed and climbed.
Northern Trust is a Chicago based, healthy bank. But we know they made at least one jumbo mortgage to a couple whose financial history did not support it.
In 2005, the Obamas acquired a $1.32 million mortgage from Northern Trust. Maybe the president speaks with personal pain when he uses the term predator lenders.
'til later
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