Dr. Wachter's U.S. Mortgage Payment Index
Fourth Quarter, 2007With new regulations and tightened underwriting guidelines in effect, the "mortgage meltdown" of 2007 has left many borrowers to wonder what type of loan is best for their financial situation and how much house they can actually afford. To help clear the confusion, Dr. Susan M. Wachter, Professor of Real Estate and Finance at The Wharton School of the University of Pennsylvania, has issued her fourth quarterly report in partnership with Genworth. In it, Dr. Wachter compares current mortgage products and payment options, and addresses the importance of responsible lending and homeowner assistance programs to help borrowers start and end on the right track.
Q4: Today’s Mortgage Market Woes Help Shape a Better Tomorrow
At the outset of 2008, those of us who study the
real estate market closely are taking stock of what caused the "mortgage
meltdown," what is to come and how we can help solve the crisis.
The immediate impact of the mortgage meltdown has been a lack of access to credit for borrowers with low FICO scores and
small down payments, and those seeking exotic loans that ultimately turned out to be very risky. This is good news
from a societal perspective, but the lack of credit availability for these
potential borrowers may have long-term ramifications on the market. Now that we have learned the lessons of
risky subprime and exotic mortgages, we must address responsible ways to bring
these borrowers back into the market. Affordable home financing options still accessible to these borrowers
include loans secured with private mortgage insurance or through the Federal
Housing Administration (FHA).
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