This past fall marked the 10-year anniversary of the start of the financial crisis. Fueled by risky, subprime mortgages with predatory terms, the financial crisis and ensuing recession was the worst economic disaster in the United States since the Great Depression.
Law.com-
This past fall marked the 10-year anniversary of the start of the financial crisis. Fueled by risky, subprime mortgages with predatory terms, the financial crisis and ensuing recession was the worst economic disaster in the United States since the Great Depression. Unemployment climbed to 10 percent nationally and 12 percent in Philadelphia. Between 2007 and 2015, approximately 7.5 million homes were lost to foreclosure, affecting an estimated 19 million people. In Philadelphia, foreclosures peaked in 2009, with approximately 8,500 foreclosures filed in that year alone.
As Philadelphia continues to experience a boom in housing construction and as prices in many neighborhoods climb ever higher, it can be easy to forget that we are only recently emerging from a crisis in which thousands of Philadelphians lost their homes. The anniversary of the financial crisis provides an important opportunity to reflect on the impact of the foreclosure crisis and how we can make sure every Philadelphian has a safe and affordable place to call home.
Many Americans have probably heard the term “subprime” and most may understand that the financial crisis was caused largely by risky mortgage lending, but in my experience, few understand how truly predatory and egregious so many of these loans were. As an attorney who represents low-income homeowners in Philadelphia, I have seen mortgages with “exploding ARMs” (loans that advertise a low teaser rate, but that jump to an unaffordable payment six months into the loan, and never go back down again), loans with hidden balloon payments that are almost as much as the original loan and that come due when the borrower thinks she has paid off the loan, loans that are structured to never pay down any principal, loans with fraudulent appraisals, and loans with an 18-percent default rate that was triggered as soon as the borrower was late on just one payment. I have represented numerous homeowners, many of them elderly and with limited financial experience, who simply had no idea what they were signing. Sometimes the mortgage broker lied. Sometimes the broker brought the paperwork to the client’s home for them to sign, putting additional pressure on already vulnerable individuals. In one case, when the homeowner was confined to her bed after a stroke, the mortgage company conducted the closing in her bedroom. She could barely sign the paperwork, much less understand what she was signing.
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