Is Affordable Homeownership Going By the Wayside?

It is an open secret that the current mortgage meltdown finds its roots in the creation of subprime mortgages that were marketed heavily to those who would not ordinarily qualify for a home loan. This has sent minorities and the fiscally somewhat unstable in droves to eager loan brokers who would set them up with loan products that initially looked very affordable, but over the course of their existence would have the power to make the home virtually impossible to retain. Interest only loans, adjustable rate mortgages, and sometimes also a combination of the two have made it possible for homes to be bought and initially present with easy to make monthly payments – unfortunately not for long.

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At this juncture of the American economy, the great social experiment shows that it is untenable and the gains made by minorities and those considered working class with credit problems in the realms of homeownership is being undone. More and more minority homeowners, single parents, seniors, and working class consumers who relied on subprime mortgage loans to afford their little piece of the American dream now see it unravel and lose their homes in addition to their hard won credit rating.

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Currently the number of homeowners who are paying way beyond the 30% income threshold every month on the mortgage is staggering. Some near 40% while others are even more fiscally committed; this kind of financial lifestyle is impossible to maintain over a prolonged period of time, and as a direct result it takes little more than a job loss or an unexpected fiscal emergency to send the homeowner into foreclosure. What is more, the fact that the unreasonably high income to debt ration cannot be undone without losing the home also greatly impact the overall buying power of consumers caught in this trap.

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This debt to income ratio is also hurting their overall ability to obtain further financing and perhaps dig their ways out of this financial mess. When subprime mortgages were initially offered, the promises were plentiful and suggested that with no money down, and laughingly simple payments schemes, virtually anyone could purchase a home without much in the way of proof. Although this industry practice has since changed, at this time the families who are still managing to hold on to their homes are realizing that the ever increasing monthly payments are not allowing them to meet their other financial obligations.

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The Catch-22 pits homeowners against bankers. While the government sent bailout funds to banks in the hopes of having these funds trickle down to the consumer in the form of mortgage loans and also refinance loans, the fact that precious little has happened show that there is no end to the current mortgage meltdown. As affordable homeownership is going by the wayside and owning a home is becoming anything but affordable, there is the question whether this trend can be interrupted or must continue to run its course until those that cannot be rescued finally relinquish their holds on the real estate they hold.

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