Do people realize that its an error to blame this economic mess on Subprime lending?
The fact is subprime lending was a good idea (helping people with lower fico scores if they had enough income). The dangerous part was the ARM and Option Arm Lending. About 80% of subprime mortgages are good…and still good. This financial mess we’re in was influenced by lax regulation in giving out ARM’s (Adjustable Rate Mortgages).
I find it sad to see the media blame folks with subprime loans for this mess, when the issue is really the ease at which lending institutions gave out ARM loans because they felt home prices would continue to rise forever, and when that didn’t happen and people mortgage payments adjusted and they couldn’t refinance due to lack of equity the whole system crashed and they blame the borrowers. Just despicable.
Anyone have any insight on this situation?