Would our current economic state be any different if banks had not been handing out mortgages like candy during the Fourth of July parade? It is nothing new to the American people to hear that the mortgage industry is a huge factor in our current economy downward spiral. But would things have been different if there had been more strict rules set in place with who could take out a mortgage and why? You want to be able to say “yes,” but not many can say it with full confidence.
Look at the “flipping” house craze that the average American thought they could just walk right into. They have devoted entire television shows to flipping houses. Many do so successfully, and others think it looks easy, so they go out and purchase a home, “flip,” and in the end they get flipped. When they can’t sell the house because they have not done their research on the market and do not understand the amount of time and effort it takes. Yes, it’s a nice paycheck at the end of the day and seems like quick money for the average American making 40,000 dollars a year. But, how many of those bad mortgages were given to individuals who just wanted to flip a house to get rich quick, not realizing that the average American holds on to a home for 7 years before selling and those television shows, have full time contractors helping them to finish on time.
American’s should want a home, not something you purchase on margin to turn around and sell a month, two months later. This modern day get rich quick scheme sounds very familiar to what happened during the crash of the market in 1929, everyone had bought on margin and when it was time to pay up, surprise; no one had the money to do so.
When the mortgage industry started to be hit hard, surprise again, they wanted their money and no one had any to give. Maybe we will never learn from our mistakes, or going back to the original question, maybe something will change drastically with the mortgage industry. Out of the 1929 crash came the FDIC, what will it take now in order to be able to get a home mortgage, not 2, 3, or even 4 in order to make a quick profit for yourself by fixing up a run down house.
It is scary now to think that you could take out a $100,000 mortgage and never put a dime down for it, people with no savings; nothing, got a home mortgage. And now minimum, you must put 20% down in order to get a mortgage, not many people have $20,000 sitting around to purchase a home. This is not a bad thing to not be able to give anyone who wants a mortgage one, but how many homes will sit empty because they are out of reach for the average person.