The answer is very complicated, but it is fair to say that bad credit mortgage lenders are partly to blame for the problems we are facing worldwide. Sub prime lending boomed for a decade and millions of people around the world got mortgages when at other times they would have been turned down. The economies in the world were strong and bad credit mortgage lenders could afford to ignore the risk. Unfortunately, things got too bad and lenders lost sight of the main problem – mortgages are things that can go wrong and must be lent cautiously.
Many different institutions have been affected because so many institutions had exposure to the bad credit mortgage lenders’ mortgages. The lenders would package up lots of mortgages and sell them to other banks for a profit. It was a way to create more money from more debts and for a few years it was an excellent, intelligent way to make sure everyone could have finance. The problem was too many bad credit mortgage lenders did it and too many got lazy, lending to people that could not afford to keep up with repayments. So bad credit mortgage lenders are to blame for enabling people to take out more and more risky mortgages.
But they have rallied, and bad credit mortgage lenders have begun to change. Many sub prime mortgage deals have been taken off the market, especially 100% loan to value deals that leave people in line for negative equity. They have also put rates up and tightened criteria dramatically. Where once anyone could get a mortgage from bad credit mortgage lenders, now you must have a cleaner record, you must have some equity and you must be able to pay back some tough rates. It’s not impossible to find their mortgages, but it is a process that will not be as easy as several years before. The time of free mortgage and free credit are over.
But bad credit mortgage lenders have not disappeared completely. Because they were part of the credit crunch problem, they are now trying to be part of the solution. And the solution is better borrowing and better lending. Bad credit mortgage lenders are working with mortgage brokers to make sure those looking to get hold of bad credit mortgages are carefully policed and carefully advised, making sure the excess and mistakes of the past are not repeated by bad credit mortgage lenders.