Mortgage: where is it leading to?

Would you believe this?
About 40% of Americans don't own the houses they live in. You would say, perhaps they live in rented apartments. The point I am trying to make is, the houses were theirs but now they are mortgaged.

The pride of boasting that "I own the house I live in'� has somewhat subsided. The mortgage market has not declined in spite of the high security risk incurred after the September 11 attacks. The Americans have only made use of the lowering rates due to the economy plunge. It's only raining dollars.

A cursory glance over mortgage gives us a very comfy feel, but alls not well out there.

The Federal Reserve Survey of Consumers showed that 24.7% of families headed by a 65-74 year old person had a mortgage debt in 1995. Those figures have risen by 15% in 2004 and forecasts say the figure will only rise further. The life expectancy in the 90s coupled with decreasing fertility enhances the percentages. The heirs are inheriting not property but mortgages which they are liable to, in spite of them not using it. Thus more and more youngsters are keeping note of the financial transactions undertaken by their parents.

Secondly, there is an emerging trend of paying off unsecured debts like credit card debts with mortgages. This results in the credit market suffering tremendously. The card holders' balances are advancing by single digits only whereas in the later half of 1990s there were double digit rises. The fact that secured debts involve interest rates as low as 5.86% today while credit cards rates are 13.73% or more , is what tempts them to take quick loan s via the latter and pay off with mortgages. But if you fail to pay off the credit payments, you might have to only pay fines but in mortgages you may lose your house.

Thirdly, the mortgage scamsters are devising ingenious methods of committing frauds. The use of on-line loan applications have multiplied and the system has become a bit complacent. The fact is technology opens options to check for validity better. When you submit your tax returns the IRS number allows the lender to check for details. But hacking through government sites and abusing credit worthy Social Security numbers has become common practice. In spite of the fact that sub-prime loans have been floated in the market, there are very few takers.

Because of the forgery and identity frauds committed mostly by industry insiders, the primary market sustains but the secondary market suffers. Mostly the government institutions like Fannie Mae, Freddie Mac and Ginnie Mae have incurred losses in millions as they have to pay for the frauds, especially insurance money.

In days to come mortgage strictures are only going to get tougher, but the uses Americans put them into have increased competition. The private lenders have reaped good dividends in the last year with more refinancing and home equity loans booming. The housing market is expected to grow.
But Americans need to love their homes more often and not mortgage your dream for plastic!

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