Yahoo News yesterday ran an article that stated millions of home owners are getting notices in the mail that the interest rate on their loans is going up, in some cases to double digits.

The article goes on to say that the hardest hit will be those with less that stellar credit and cannot afford to make the higher payments. This is because there are more risks with poor credit and lenders impose higher rates and restrictions.

A quote from the article states "The prospect of significant and growing losses has already rocked Wall Street and shaken up the broader mortgage markets.  And, concerned about the human suffering, policymakers are already searching for ways to help people out".

Mark Zandi, chief economist at MoodysEconomy.com states "The meltdown in the subprime market is the biggest threat to the housing market and the broader economy".

Think we have sent he worst?  Consider this:  Over the next several months, banks will be changing the "teaser rates" that homeowners received two years ago. The peak period for resetting loans is in October, when the rates on some $50 billion worth of mortgages are likely to rise by 2 percentage points or more. This will translate into hundreds of dollars more per month for many homeowners.

Remember when our government in it's wisdom decided that "everyone" of age in this country had the right and obligation to own a home?  I remember it like it was yesterday.

All of a sudden the Subprime market was created people were walking into Subprime loan companies anywhere USA and as long as they had a pulse they could get a loan.  It didn't matter if their credit was less that perfect and they didn't have any money for a down payment....."LOAN APPROVED"

What did the government think was going to happen when hundreds of thousands of Subprime loans were made to borrowers that were not required to take care of their credit and were not required to save for a down payment like Grandma and Grandpa and Mom and Dad had to do?

It isn't rocket science.  Let's REWARD people for taking care of their credit and "Saving" money for a down payment.  The economy was awesome when credit wasn't so "loose" and our own housing economy as bad as it is can get back on track by going back to making home loans the way they used to be made.

In this particular case "going backwards" to ways that worked is a good thing.

 Posted By: George Tallabas - Boise Idaho Real Estate Agent - Associate Broker 
with RE/MAX Advantage, Canyon Counties #1 Brokerage in sales and listings
specializing in Boise Idaho Real Estate and Southwest Idaho Real Estate.