Real Estate
Money Management

Who are the losers in subprime mortgage crisis?



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Define loser and then consider the possible answers. In many ways people see the folks who are losing their homes as losers in this crisis. It should be remember that for every person who looses a home in foreclosure many more subprime borrowers are still living in a home they could not have afforded otherwise. In another way the negative impact of the crisis is directly felt by other home owners in the area who are seeing falling house prices. Granted there was never a guarantee that prices only go up. Looking at a 5 year average most people who have owned a home for the full period are still looking at large paper profits. FHA has been running a program that fits almost exactly the same subprime target market. The 30 year picture is more people are able to buy even if some do default. A double edged sword. People can get hurt when they take on debt they do not know how to manage. The regulators will likely implement new rules and some of the losers in the subprime market will be those who are forced to keep renting in the future rather than convert to being a buyer.