Who is Responsible for the Subprime Mortgage Crisis?

The idea of playing the blame game has been circulating for a while, deciding exactly who is responsible for the subprime mortgage crisis is never fun, but it is a task that has to be done. Looking at who is to blame is really a sad issue, but sheds a lot of light on various problems in the mortgage industry.

 

While the number of people who are all sitting around casting blame increases so too does the amount of people who are being nominated for creating the subprime mortgage crisis.

 

The real truth is that there are several places who are ultimately responsible for the crisis and it has been a collective work from a variety of sources all experiencing problems that have not been easily solved.

 

While most consumers are quick to cry for help, many have been avoiding helping themselves as well and are merely waiting on someone to bail them out. As we determine where the blame is placed we have to look at several factors.

 

The first place to look when trying to decide who is responsible for the

subprime mortgage crisis is the buyer. The homebuyer is the person who ultimately did not qualify for a traditional mortgage for one reason or another.

 

Perhaps they are self-employed, perhaps they have bad credit, perhaps they did not have a good work history, perhaps they even had their sights set on a house that was a bit above their budget and needed some creative financing to obtain the house. Ultimately, a lot of buyers have been purchasing houses that were either not ready for homeownership or who could not afford it.

 

A lot of lenders are also taking blame in the who is responsible for the subprime mortgage crisis game. While many lenders could have been offering fixed mortgages to the huge numbers of sub-prime buyers who were looking to buy a house they were instead only offering ARM mortgages to the majority knowing that interest rates would skyrocket in the near future.

 

The lenders were counting on the skyrocketing interest rates to help increase their profits exponentially. This has come back to really hurt the banks as the number of consumers going into default has reached astronomical levels.

 

Additionally, the number of programs that are designed for the under qualified buyer has hurt as well. While most buyers have been forced to acquire a down payment themselves and work to build up their credit history while they prepare themselves for home ownership many programs were designed that would let a borrower obtain a house with no money down at all.

 

This created a huge influx of people who had no business buying a house to rush out and start buying. All of these people who were unprepared for home ownership and only acquired a house through a special program are now facing huge difficulties in actually keeping their home.

 

Regardless of where exactly all of the blame goes in the scheme of things there are several people who is responsible for the subprime mortgage crisis. Correcting the problems that have been created is now the biggest priority and requires a great deal of time, effort and money before far more people lose their homes as well.

 

Working to correct the problems and stop the blaming is a very important step at this point before more consumers are trapped into the cycle as well.

Additional Resources:
The Fuel That Fed The Subprime Meltdown

Subprime Mortgage Crisis