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There are many that don't understand this, so don't feel bad. I'm an escrow officer so have been following these trends. What's happened is based on two things: Primarily people have been talked into getting the "option arm" loans. it's great for the first 3 to 5 years when the minimum payment is far less than the regular interest and principal payment. The problem is that people only made that minimum payment and all the interest they did not pay was tacked on to the end of the loan. When the min payment option expired in 3-5 years, they found their loan balance had gone up and the regular payment was far more than they could afford. When you combine this with a property say in S. California where the market went soft, the home is now worth less than the loan and they can't even refinance to get out of it. For instance, if I had one of these loans for $400K in CA and I only made the min payment, my loan is now about $410 or $420 thousand, but my home is no longer worth $500K and worth only $420. I don't have enough equity to be able to refinance it because it needs to be a loan of only 80 percent of the value. I can't sell it because I don't have money for closing costs. Or maybe the home is worth more, but my credit sucks and I can't refinance it. My only option is to sell, but maybe no one is buying because they all think the values are going down, so my only option is to let the bank have it back through forclosure. The other problem has been that many lenders had many "creative financing" loans and you did not need to be very credit worthy. But what happens when you lend someone money who has a reputation of not paying it back? Right, they don't pay the mortgage and it goes into foreclosure. Those lenders go out of business and now we have no more creative financing for those who couldn't otherwise afford to buy a home. So those buyers obviously are not buying and the qualified buyers are thinking the market values will decrease and nobody is buying and homes go into foreclosure. does this help? I don't know of a web site.

Source(s)

Escrow Officer and Real Estate Investor.

by catherine s

2 years ago

Asker's Rating: 

Basically the reason for people losing their homes in the U.S is because tons of people who couldn't afford to pay the mortgage on a house went and bought a house anyway.

by Kagome- 2 years ago

One reason: a lot of people got loans with flexible interest rates. When interest rates went up, so did their payments. Many of these people were already making payments that were too high for their income but bigger, more expensive houses sure looked good to them...

by Bosco- 2 years ago

I don't know about a website but from what I can tell, lenders have allowed people to borrow huge amounts of money for houses they couldn't afford. It's caught up with them. Rising interest rates didn't help. Another example of people trying to live beyond their means.

by jdw- 2 years ago

It is pretty basic. Lots of people were granted loans that they never should have gotten. They didn't have the income to cover it for long term. These loans had low teaser interest rates that jumped very high and doubled the house payment in just a few years. The lending institutions didn't care, they just get the property back and duplicate the process. A scheme destined to fail. The governing bodies that oversee this type of lending looked the other way for $ome reason.

by Robert D- 2 years ago

"Talked into" was there a gun held to their heads? No they wanted WHAT they wanted and NOW regardless of tomorrow's increases.

by leslie- 2 years ago

its still a very small # that actually have gone to foreclosure. A lot of people who couldn't afford their payments once their ARMS went up are in a tight spot, especially because homes aren't appreciating like they were.

by Emcee H- 2 years ago

It's mainly because of people getting variable rate mortgages instead of fixed rate.

by rcal5@yahoo.com- 2 years ago