Mortgage originators should not trust credit scores anymore before a loan is approved. What happened to underwriting? What happened to income 먹튀사이트 and the ability to pay?
It seems nobody was worried about verifying income in the mortgage loan sector. Until recently, borrowers could simply state their income. Mortgage brokers would often “fix” the necessary documents to obtain a no income loan. This led to an alarming number of homeowners in houses that never should have qualified for. Even when a bank wanted to verify these borrower’s documents there was not real certainty. Many risky mortgages in the “suprime” subsector were approved during the past years without any proof of income and without checking the ability to pay for it. Meanwhile document falsification was very common and very easy to find on the internet. This at the same time that documentation hurdles were being lowered almost everyday.
Mortgage originators were not paying attention to these unscrupulous home loans and the borrower’s capacity to pay because they could sell these mortgages easily. These bad mortgages ultimately became the reason why many financial institutions holding this paper are now facing bankruptcy. There is a moral hazard that exists to this day because originators are not holding the paper. The U.S. financial industry now needs stricter regulation regarding income verification for all mortgages. This lack of regulation has caused default and foreclosures record high and lowered home prices in many states such as Florida, California. Now 60% of all foreclosures in the U.S can be traced back to those two states.