Unaffordable loans -- for lenders as well as borrowers
In addition, lenders tried to make up for declining mortgage volumes by originating mortgages that charged customers higher rates.
Meanwhile, the Bush administration announced today that 11 large mortgage servicing companies and a variety of other industry players have agreed to join a new coalition to keep foreclosure numbers down. The AP reports:
Treasury Secretary Henry Paulson said the initiative would boost financial companies' efforts to help an estimated 2 million homeowners whose introductory mortgages with low rates are resetting at much higher rates, just as the housing industry suffers through its steepest downturn in 16 years.
... Paulson said the new coalition had created an "aggressive plan to reach more homeowners and help them find a way to stay in their homes." That plan includes special toll-free numbers that the mortgage service companies have set up along with mass mailings to inform people of their options.
Democrats, the AP reports, say the effort isn't aggressive enough to deal with the scope of the impending problem.