The Top 10 Reasons

1. Mortgage companies starting around November 2007 stopped doing fixed second mortgages and home equity lines of credit (HELOC) due to changes going on in the mortgage industry. A lot of swift and sudden changes came to the type of companies that were farthest away from the actual money like the mortgage brokers, correspondent lenders, then the banks.

2. The banks are the one’s that set the guidelines for anybody who does business with them. Since a mortgage broker does not lend you the money (the bank does that the mortgage broker works with) they were told that they would not be honoring anymore fixed second mortgages or HELOC’s. This lead to a mad dash from all of the smaller companies to close these loans so they could sell them to the bank before the deadline or they would not be able to close.

3. What lead to this rush

1. During the housing boom there was cheap amounts of money everywhere. The Federal Reserve lowered the prime rate to the lowest level ever. With interest rates this low every company and person in the world jumped into the mix to borrow money to buy anything from real estate to cars to new factories to produce goods in. Since the money was so cheap many people could afford the payments on whatever they were buying without putting any money down that consumers often went out and borrowed as much as they could and got two or three of whatever it was they were buying.

2. In the time period between 2002-2007 interest rates on a 30 year fixed were anywhere from 4.75% to 7.5%. Historically mortgage rates have been in the 8.5%-13%. This was mainly in the 1970s-1980s. With rates so high back then people had

1. If you have a mortgage on your home you do not own your home. The bank does. Its kind of like you co-signed with the bank on the property.

2. If you miss 4 payments on a mortgage the bank has the right to kick you out of your home. They really do not want to, but you gave them no choice. This really sucks if you had owned the home for a number of years and have built up some equity. You don’t keep the equity unless you can sell it before the foreclosure proceedings start.

3. It is said that owning a home is the “American Dream” but its really a pain in the butt. If anything is broken or needs maintanance its coming out of your pocket. With all of this upkeep the home really owns you.

4. If you ever have default on anything

1. A mortgage company is in the business of making loans not being a property manager. All that they like to do is make money by selling mortgage notes to other institutions and making quick cash or by holding onto the note and collecting the interest.

2. If a borrower misses 4 payments in a row the lender has the option to start foreclosure proceedings on the home. It is in the contract you signed with them and they are only doing what the contract says.

3. After you have missed 4 payments the bank holding the mortgage note has not received 4 months of interest on the principle balance they lent you. As an example a loan at $200k at 6% interest would have a principle and interest payment of $!200 a month in which $1000 of that is strictly interest. It sucks seeing that number.