Stunning Bank Blunder During Housing Bubble Revealed
Q: Gerald, in an earlier blog post, you said that mortgage lenders are more careful now than they were during the last housing bubble. How are things different now? Doug, Lancaster, PA
A: Great question, Doug. Although I draw on my own experience operating my real estate business before, during and after the financial crisis, I’m learning more and more disturbing facts going through a study called The Role of Housing and Mortgage Markets in the Financial Crisis. One stunning thing I discovered from the research in that study was that 50% of the borrower information banks collected on mortgage loans during that period was incorrect! What that means is that not only were banks making careless loans but that in half the cases, they didn’t even know who they were lending money to! I think mortgage underwriting is more robust now, at least I hope so. Thanks for your question, Doug.
For more real estate tips and information visit my blog at geraldlucas.com.