Why? Because if you give everyone credit to buy a home whether they can pay back that loan or not you are going to create a financial crisis just like the one in 2008 and create homes "Underwater" which means that these homes are worth less than their mortgages so people "Walk away" from them because the value o the house is less than the mortgage they are paying. It's just logical sense when that happens. If this happened again people would walk away from their mortgages again nationwide or worldwide. This is just practical reality.
Why does people walking away from their mortgages create a financial crisis? Because as too many people walk away from their mortgages in any one area this reduces the value of those remaining properties so owners have no vested interest (outside of keeping good credit) not to walk away from their mortgages. Then the remaining people's properties suddenly reduce in value from those who walked away from their mortgages and this then makes the rest of the people who have underwater homes then walk also away from their mortgages too. This is the basis of the Great Recession caused by giving loans to people who could not pay back their mortgages in the first place. Then when people in factories all lost their jobs caused by the Great Recession it became an unending cycle of desperation for all mortgage holders in many areas of the country that were middle class to poorer.
Mostly in the top 10% of areas to live this didn't happen though. So, the middle Class and poor who owned homes lost their homes which was their primary source of wealth. Then in revenge for this these people voted in Trump to take revenge on the system and we are now living with the result of this further chaos now. 75% of the wealth of the middle Class was lost during the Great Recession which created unbelievable anger toward banks in general and the economic system that did this to them. The end result is Trump and even worse things happening now to everyone.
No comments:
Post a Comment