Sub-Prime Mortgages: The Latest De-Regulation Fall Out

The sub-prime mortgage market is exploding all over the country. Each county, state and the Federal Government is reeling over the grim statistics. These numbers show that millions of Americans are facing foreclosure. This foreclosure debacle is no more the fault of the sub-prime borrower than Hurricane Katrina is the fault of the residents of New Orleans.

External forces created this foreclosure meltdown . Deregulation of the banks , lending institutions & Savings & Loans was the first step toward opening up home ownership to anyone with a pulse. The Depository Institutions Deregulatory and Monetary Control Act of 1980 abolished usury laws on first-lien mortgages.

Usury laws, can prevent mortgages above a certain rate from even being made. Since lending institutions could not charge higher rates to sub-prime borrowers, this act eliminated that problem.

This law allowed lending institutions to actively market their products to those citizens who were least able to pay. This law allowed the lending institutions to charge higher rates. This law allowed lending institutions, savings and loans to fatten the pockets at the expense of the sub-prime borrowers. All the "slick rick" loan officers, bank officials and finance companies made money.

This act also was the starting point of the Savings & Loan Scandal - This act , though intended to help individuals, helped to create two of the largest financial scandals in the history of the United States. The first was the Savings & Loan Scandals of 1990 and nowin 2007, A Record Number of Sub-prime Foreclosures. This tidal wave of foreclosures was put into action long before the first sub-prime borrower signed on the dotted line.

Yes, the fact is that many Americans who could not afford to purchase a home were given the opportunity to own a piece of the American Dream. Sub-prime borrowers were eager to purchase their first home. Now that that dream is now a national nightmare, no one wants to take the blame.