Industry NewsMortgage

Dirty little mortgage secret

Risky real estate loans, looser standards may lead to trouble
Published on Sep 29, 2005

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by CareyBot

"A house built on sand" might be the best way to describe the foundation of today's exuberant housing market, as sub-prime mortgage loans and looser underwriting standards foreshadow trouble for lenders down the road.

Rising interest rates could lead to higher defaults, and lenders of newer, riskier loan products could get hit hard if borrowers default on loans that end up being worth more than the homes.

"Certainly groundwork has been laid that could lead to problems," said Keith Gumbinger of New Jersey-based financial publisher HSH Associates.

And, an ind ...