Looser lending leads to more foreclosures |
Saturday, 28 August 2004 |
Looser
lending leads to more foreclosures
Saturday, August 28,
By PAMELA YIP / The Dallas Morning News
""Over the last 10 to 12 years, underwriting guidelines have gotten much more
lax,"" said David Motley, an executive vice president at Colonial National Mortgage
in Fort Worth . "Today you can get a 100 percent loan on a purchase or a 106
percent loan on your purchase to cover the closing costs."
Critics say the looser standards contribute to high foreclosure rates nationwide
because owners with no equity in their homes find it easier to walk away from
mortgages if they get into financial difficulty â and can get approved for
another mortgage later.
Even with low mortgage rates, first-time buyers have strapped on so much
mortgage debt that ""roughly one-third now pay at least 30 percent of their
after-tax income on shelter, and half of the lowest-income households spend
at least 50 percent of their incomes on housing,"" according to a report published
this month by Merrill Lynch.
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