Country wide home loans given to low-income families for over-valued homes are part of what has accelerated the current credit and mortgage crisis. Now first time home owners and other borrowers are waking up to find they have ‘negative equity’ – the value of their property being worth less than their mortgage!
As well as the property market, individuals who over-rely on their credit cards are being hit hard too. The minimum APRs on even the low rate cards are at least 4% higher than two years ago.
As a result of the above facts and with the shocking rise in the price of gas most families will be hit hard and will eventually be forced into foreclosure and ultimately bankruptcy.
The lenders also have a sneaky clause in the contracts that gives them the right to call in the loan whenever they wish which many individuals are not aware of.
Most credit card companies have also doubled the minimum payments which further increases the financial pressure on the cardholder.
If you are unable to meet your minimum payment, your credit card company may offer to consolidate the debt by giving you a loan on your home equity which is another way of making sure they have some security in case you default on the new loan.
Finally lenders use ‘adjustable rate mortgages’ ARMs to entice borrowers into financial mess.
The country is already seeing an all-time high foreclosures of homes in Indianapolis, Atlanta and Dallas-Ft.
With the Wall street crisis and as fuel prices continue to rise, the credit crunch will continues to bite, and we might see a wave of foreclosures well beyond what we saw in 1980s.
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