The Mortgage Meltdown Explained…

by Shea Homes Arizona on March 15, 2013

This week we featured the first episode of our new mini-series, The Homebuyer’s Seminar.  Though a scary subject, we feel it is important to help you understand how the “mortgage meltdown” happened and how our housing market is currently recovering from that downfall.  This photo is a visual explanation of the process, and if it makes your head spin- check out the video and Scott Pocock will explain it to you.

Essentially, the housing market began its downfall when Wall Street investors became greedy for more loan files and then lowered the standards of the mortgage underwriting criteria to the point where almost anyone was being approved for a loan.  No strict documentation was required anymore.  It came back to bite our housing market because homeowners with no income, no credit and no assets were not making their mortgage payment.  Loans were no longer backed up by mortgage back bonds and homeowners’ homes were valued at much less than their mortgage.  Foreclosures rose to an all-time high and the downward spiral from there led us to the mortgage crisis.

Though our housing market went through a tough time, we are coming out of it rapidly and we, at Shea Homes Arizona, have ridden the ups and downs of the mortgage market before.  We are committed to every community that we start and we have been around and will be around, for a long time.   Here is a short list of things that are Shea Homes Values that continued even through the lowest points of the housing market and that differentiate us from the competition.

  • We limit the amount of inventory homes we build.
  • We have never exited a community early.
  • We do not sell to investors to help with the overall home values.
  • We promote pride of ownership since those living in the communities actually own the homes.
  • We continued to purchase land knowing the market would rebound.
  • We opened seven new communities in 2012.
  • We pre-qualify all prospective purchasers through Shea Mortgage who also offers a credit improvement program to help people purchase in the future.

Now that you understand the housing money market and how the mortgage meltdown came about, check out our Economic Forecast video and blog to see all the positives that our housing market has experienced in 2012 and what we can expect for 2013! Also, keep checking our Facebook page for more updates as the year continues!

{ 1 comment… read it below or add one }

Erick Gonzales April 28, 2013 at 10:36 am

That first main paragraph sums it up well. It all became theoretical money bouncing around Wall Street and these terrible never-should-have-been-approved loans got packaged together in big groups to ‘minimize risk,’ then those loan packages were sold to other creditors like that – marketed as ‘dispersed, low-risk loans’ when really they were ticking foreclosure timebombs.

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