The Subprime Crisis.
Thursday, March 29, 2007
So far at least much of the problem seems to be confined to the subprime mortgage market, where many lenders found creative financing solutions for home buyers who otherwise would not have been able to qualify for a mortgage. While this creative financing, including no money down loans, interest only loans and even negative amortization loans did help get buyers into homes, it also helped to create an untenable situation for the future.
The low monthly payments that home buyers were able to enjoy came at a price, and much of that bill is now coming due. As interest rates adjust and interest only mortgages revert to traditional payment schedules, more and more homeowners are finding themselves unable to afford their mortgage payments. This has in turn led to an increasing number of foreclosures and distress sales.

