In a news release from the
Mortgage Bankers Association, poor underwriting practices contributed to the increase in defaults and foreclosures of loans originated in 2006 and 2007.
A report by Fitch Ratings made several observations regarding the current mortgage situation the country is facing.
In addition to the inherent risk of these products, evidence is mounting that in
many instances these risks were not controlled through sound underwriting practices.
Moreover, in the absence of effective underwriting, products such as “no
money down” and “stated income” mortgages appear to have
become vehicles for misrepresentation or fraud by participants
throughout the origination process.
Fitch believes that much of the poor underwriting and fraud associated
with the increases in affordability products was masked by the ability
of the borrower to refinance or quickly re-sell the property prior to the
loan defaulting, due to rapidly rising home prices.
Homeowners who have very little or nothing invested in their homes would seem more likely to walk away when times are tough.
The effort should be in finding those honest hard working homeowners who wish to keep their homes and helping them find solutions to
avoid default and foreclosure.
Related Florida real estate views:
Mortgage fraud in FloridaImpact of foreclosure on familiesFlorida vs Countrywide. Lawsuit filed.- Greg Staker - Watson Realty Corp. - 407-304-0255
