Banks Will Lend To Mortgage Defaulters

Here is another sign that the credit crunch is easing — banks will lend money to people who have defaulted on their mortgages.

Tens of thousands of people have strategically defaulted on their mortgage, realizing that they owed far more on their mortgage than their home was worth.

Beth Kassab writes:

The story reports that more banks are easing up on extending credit to borrowers with foreclosures or mortgage defaults on their records, but otherwise have good credit.

No doubt this is a growing group of people. From the story:

“The banks approving these loans consider these borrowers a special group, says Steven Chaouki, a vice president for financial services at TransUnion: Because they are current on all other loans, banks see them as a lower risk relative to borrowers who have missed payments on multiple loans. The housing bubble and bust put otherwise responsible borrowers into bad situations, says Marcus Stanley, policy director at Americans for Financial Reform, a public interest advocacy group. “A lot of responsible people through no fault of their own found themselves in mortgages that weren’t practical for them.”

The paradox here is that while banks supposedly want to discourage people from defaulting on their home loans, they are quietly opening up credit to those who do.

About Luke Ford

Raised a Seventh-Day Adventist at Avondale College in Australia, Luke Ford moved to California in 1977. He graduated from Placer High School in 1984, reported the news at KAHI/KHYL radio for three years, attended Sierra College and UCLA, was largely bedridden by Chronic Fatigue Syndrome for six years, and converted to Judaism in 1993. From 1997-2007, Luke made his living from blogging. Living by Beverly Hills (Alexander90210.com), he now teaches the Alexander Technique (moving the way the body likes to move). Lessons cost $100 each and last about 45 minutes. In 2011, Luke completed a three-year teaching course at the Alexander Training Institute of Los Angeles. His personal Alexander Technique website is Alexander90210.com. Luke is the author of five books, including: » The Producers: Profiles in Frustration » Yesterday’s News Tomorrow: Inside American Jewish Journalism
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