Approximately 2 million homeowners, a majority being in minority neighborhoods, are at risk of losing their homes, either through default or by foreclosure.
The housing bubble encouraged homeowners to apply for Adjustable Rate Mortgages (ARMs). New homeowners were able to purchase zero dollar down properties, whilst existing homeowners re-financed, either to upgrade their homes, or spend the cash on luxury items.
However, a majority of those homeowners with poor credit signed up for adjustable rate sub-prime loans (a higher cost loan), now those loans have been reset to higher rates of interest, and it is proving incredibly difficult, if not impossible, for those homeowners to meet their payment schedules.
The housing market turmoil is affecting the financial markets, and the broader economy. Former Federal Reserve Chairman, Alan Greenspan, has stated that he did not realize the potential damage sub-prime mortgage lending to borrowers with poor credit could do to harm the U.S. economy.
How could the head of Americas central bank (the Federal Reserve), the most powerful economic planner in the world for almost 20 years, not have realized that cold,...
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