One of the biggest factors in the current mortgage market crash is the fact that ARMs (adjustable rate mortgages) reset -- and are still resetting -- to rates that homebuyers couldn't afford. While there is some blame for consumers who didn't think through the purchases, some of the blame also has to go to mortgage lenders.
Many mortgage lenders assured borrowers buying a home that they would be able to make payments once the extra-low teaser rates on the ARMs expired. Some of them told borrowers that they could just refinance to a lower rate before the teaser rate reset. In both cases, the reality did not match the promises.
And we ended up with the mortgage market crash.
Now, though, Congress is intent on trying to keep the same thing from happening. A new amendment approved for the Senate housing relief bill requires mortgage lenders to disclose what the monthly payment will be once the mortgage payment resets.
This is something that should have been required up front in any case. And it offers more proof that some mortgage lenders will do their best to hide things from consumers, duping them and lying (even if by omission) to close the deal on a higher mortgage loan so that they can get the higher commission.
image credit: sxc.hu
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