Why the Mortgage Mess Matters

When news of the dramatic rise in home foreclosures first broke in 2007, few could have predicted the tidal wave that has shaken the housing market, the credit industry, the stock market and even consumer confidence. Even those Americans who can comfortably make their mortgage payments have felt the effects of the subprime mortgage crisis – in their real estate dealings, loan requests and investment portfolios.

How It Happened
The trouble began with the swift increase in housing prices across the nation. To keep homeownership accessible to consumers, lenders relaxed their guidelines, often giving borrowers' qualifications only a cursory review. Consumers were able to afford the American dream thanks to "exotic" loans with adjustable rates, interest-only periods and balloon payments.

And dream they did – until interest rates soared, leaving many borrowers scrambling to make the higher payments. Flattening housing prices didn't help. Many who tried to escape from soaring monthly payments by selling or refinancing their homes found that they owed more than the house could fetch in the
depressed market.

The Bigger Picture
Homeowners' inability to make their mortgage payments would seem like an isolated problem between the lender and the homeowner. But many mortgage lenders were eager to share the risk of subprime mortgages on Wall Street. Mortgage-backed securities, created by bundling together thousands of mortgages into a series of bonds, lured investors from around the world who wanted to cash in on the U.S. housing boom.

When homeowners began to default on their mortgages, the bond issuers couldn't cover the interest payments and the bonds lost value. When banks responded by tightening credit, it hindered many corporate financing deals and led investors to seek safer options, which sent stock prices falling. Tighter credit also made it more difficult to secure a home mortgage, further depressing the housing market and aggravating the problem.

How Can Wings Help?
Wings Financial has financed a home in every state! Not many lenders (large or small) can make that claim. All these mortgages are funded and serviced by us. We have the depth of resources necessary to keep our lending in-house – so your loan won't get transferred. We won't default. And your checks will always be made out to us.

We take pride in the fact that we have innovative loan programs, low closing costs, a knowledgeable mortgage staff and great service. Our already low, competitive rates are now reduced even more. And, we offer the ease and convenience of applying online. Plus, our professional mortgage service representatives will assist you in understanding the complex world of home financing.

Options Galore
Your credit union offers a variety of loan options with flexible rates and terms. That includes lower closing costs than most mortgage lenders. You have the strength and stability of Wings Financial Federal Credit Union on your side.

 

This publication does not constitute legal, accounting or other professional advice. Although it is intended to be accurate, neither the publisher nor any other party assumes liability for loss or damage due to reliance on this material. Images may be from one or more of these sources: ©Jupiterimages, ©Getty Images, ©iStock, ©PhotoSpin.
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