How Did We Get There?
It is important to know that you are not alone in this mess. In 2003 the Federal Reserve wanted to stimulate the economy from the tragedies that occurred and economic downturn we were feeling as a Nation from September 11. The goals of the Federal Reserve were to increase the percentage of homeowners (from renters) from the average of 60% at that time to 75%. To do this they drove down the cost of borrowing (interest rate on your loan) and made it easier for Wall Street to invest in the Residential Mortgage business. Home prices shot through the roof as the common Joe was now able to buy the $300,000 house he couldn’t afford without any documentation to prove to his lender of his ability to make the payments on his interest only adjustable mortgage. In addition these products were being pushed by loan officers on their clients professing a dream of the increase in home values never coming to an end. Most people were under the assumption that the day to day drastic increases would taper off but never imagined it would plummet like it did. As unemployment increased close to 10% in Arizona, foreclosures sky rocketed and homeowners felt the hit in the value of their home. The new administration came to the rescue by creating HAMP (HOME AFFORDABILITY MODIFICATION PROGRAM) which was to assist in the modifying of borrowers mortgage payments.
It is important to know that you are not alone in this mess. In 2003 the Federal Reserve wanted to stimulate the economy from the tragedies that occurred and economic downturn we were feeling as a Nation from September 11. The goals of the Federal Reserve were to increase the percentage of homeowners (from renters) from the average of 60% at that time to 75%. To do this they drove down the cost of borrowing (interest rate on your loan) and made it easier for Wall Street to invest in the Residential Mortgage business. Home prices shot through the roof as the common Joe was now able to buy the $300,000 house he couldn’t afford without any documentation to prove to his lender of his ability to make the payments on his interest only adjustable mortgage. In addition these products were being pushed by loan officers on their clients professing a dream of the increase in home values never coming to an end. Most people were under the assumption that the day to day drastic increases would taper off but never imagined it would plummet like it did. As unemployment increased close to 10% in Arizona, foreclosures sky rocketed and homeowners felt the hit in the value of their home. The new administration came to the rescue by creating HAMP (HOME AFFORDABILITY MODIFICATION PROGRAM) which was to assist in the modifying of borrowers mortgage payments.
