Government Rescue Adverse Credit Mortgages
November 3, 2008
The Federal Government’s apparent willingness to support the market for adverse credit mortgages in the United States raises the question as to whether the UK Government should consider doing the same. The House recently passed a allowing the Federal Housing Administration of providing insurance to lenders on mortgages that are in danger of becoming delinquent. While final legislation is still not a sure bet it begs the question of whether a similar scheme would work in the UK.
The housing crisis which has gripped the US over the last year or so has seen thousands of adverse credit mortgages – or sub prime mortgages as they are called across the pond – find their way into default and render the mortgagors homeless. Such home loan products were easy to obtain in the early part of the decade due to lax lending criteria and a property hungry public. What goes up must go down and the American property market has plummeted on the back of mortgage defaults and mass repossessions. Read more