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Article: The credit crisis. (increase in mortgage foreclosures and personal bankruptcy filings)
- Article from:
- Mortgage Banking
- Article date:
- February 1, 1998
- Author:
CopyrightCOPYRIGHT 1998 Mortgage Bankers Association of America. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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Mortgage foreclosures and personal bankruptcy filings have been steadily increasing, in part as a result of the use of home-equity borrowing for purposes other than home improvement, such as debt consolidation. Potentially troubling are the "125 LTV loans," junior mortgages in which the borrower is allowed an aggregate mortgage debt totaling as much as 125 percent of the market value of the mortgaged property. Although this junior debt can clearly benefit both the borrower and the lender, an increased reliance on credit should be recognized as a borrower behavior pattern that threatens to push up the rates of default and bankruptcy among a rapidly growing universe of ...