Mortgages Essay Example | Topics and Well Written Essays - 1000 words

Mortgages - Essay ExampleThese compound problems have worked to create a situation in which numerous homeowners have found themselves holding on to high interest rate mortgages for homes that are worth less than they owe to pay off their mortgage. Such a situation is known as an underwater mortgage. Due to the fact that different political parties have sought to take advantage of this misfortune by want to capitalize on the rhetoric surrounding the emersions as a way to drum up support for a given candidate, the problem has been exacerbated as the federal official government has furtively toyed with different types of interventions only to do little if anything to ameliorate the root problem. Thus, this brief essay will consider whether homeowners with subprime mortgages should be allowed to force their lenders to negociate their terms. The answer to the question is somewhat more complex than a simple yes or no. From a purely economic point of view, the individuals who hold on t he home loans at the banks terms and conditions have entered into a legally binding contract that they had every opportunity to review and seek to understand prior to signing on the dotted line. In this way, a degree of culpability must be real by those mortgage holders that initially accepted the terms and conditions, regardless of whether they were too lazy to take the time to read and fully understand them (Richardson 87). From the banks point of view, much of the problems associated with the high take of subprime mortgages that had to be completed were a result of the unnatural legislation (Dodd-Frank) that was forced upon the banks as a means to fulfill a certain type of quota with reference book to those within society that would otherwise never be able to afford or quality to purchase/borrow a house of their own (LaCour-Little et al. 88). In this way, it is impossible to blame the entire situation on the financial institutions themselves as the government had a heavy role in creating such a crisis in the first place. From the individual borrowers point of view, the banks instituted extraordinarily high interest rates due to the fact that they considered these subprime borrowers to be of an extreme default risk (Hill 49). In a way, these extremely high rates were nearly self-fulfilling prophecies due to the fact that as soon as the economy began to cool, the first individuals that were going to feel the bray were necessarily those that had borrowed to the max and were going to have hardship making sure that their high interest rate mortgage is paid every month. One magnate rightly question why it should be incumbent upon the financial institution to renegotiate a signed and legally binding contract that has already been agreed upon with a terms of either 15-30 years. The answer to such a question can actually be found outside of forcing the financial institution to renegotiate the loan terms (An et al. 546). As such, a litany of refinancing offers exists for qualified individuals. Those rates that were common during the early 2000s have dropped to record lows within the past several years. The issue with such refinancing offers is that they invariably require a large amount of start up costs associated with actually changing the loan from one lender to another.