The Qube Exchange

One word you can’t avoid when talking about the current real estate market….foreclosure. We are currently seeing huge foreclosure year over year growth rates, especially in those once unbreakable markets throughout California and Massachusetts. Throughout the past several years, many people approached their banks with a property priced out of their financial reach. What approach did financial institutions take? They used lots of creativity to let those individuals play out their dreams….subprime lending. This lending practice gives less qualified borrowers (low credit score, low income, sometimes purpose of loan, etc) the ability to obtain financing who otherwise would have been shut out of the market. This comes at a higher cost to the borrower which often times means they pay little to no principal on their loan. Put that with higher interest rates and stalled price appreciation….ownership is now actually destroying wealth. If banks didn’t craft these risky loans and allow individuals to overextend themselves, we wouldn’t see the foreclosure growth rates we see now.