The mortgage mess

The mortgage mess


STUPID LENDERS making stupid loans to stupid borrowers. You might think this sums up what the surge in mortgage foreclosures means to you. You would be mistaken.


That so many homeowners are having such trouble meeting their mortgage payments could very well mean your own home's value has dropped, that you may not be able to get a home-equity loan, or that your retirement savings will grow more slowly than you planned. Conceivably, it could even mean that the global financial system -- and by extension the economy and even your job -- is threatened.


The current mortgage mess has many causes, but none is more important than the abuse of an arcane process called securitization. In recent decades, creative bankers developed financial securities whose value was derived from homeowners' mortgage payments. More...