The Current State of Mortgages in the United States - Past, Present and Future

AppId is over the quota
AppId is over the quota

United States is a consumer driven economy and for many years this economy is fueled by the ability of consumers to tap in the equity of their homes. As homes in United States appreciated, the consumer was able to cash out more and more of this equity. This made the mortgage industry in Unites States, one of the most important industries in the economy.

The mortgage industry in U.S.A. is so interconnected within the economy so even the people that are not a homeowner are indirect participants of this major finance sector. Although you might never hold a mortgage; through your pension plan or your 401k investment plans, there is a very good chance you might be financing mortgages in United States.

Mortgage industry in U.S. is a leveraged industry and most of mortgages generated by the mortgage broker are sold back in the market as MBS (mortgage backed securities). This gives the ability to mortgage brokers to leverage their funds over and over again. MBS are than sold to investors and mutual funds, and make up a considerable amount of the investment world.

Investments on your pension plans are most of the times in mutual funds which are participants in MBS. Since the mortgage industry in United States runs so deep in everyday life of almost everyone, the housing crisis in 2008 had a ripple effect in all economies.

To promote homeownership, the U.S. government created several government sponsored programs to guarantee the mortgages generated the banks. Most of the outstanding mortgages in United States today are guaranteed by Freddie Mac and Fannie Mae. Since the loans were guaranteed by the government of United States, banks eased many requirement of obtaining a mortgage. Individuals not only were able to get a mortgage with less than 20% down, but in many cases they were able to get a mortgage for more than the value of the home. Such practices created the housing bubble.

Today, after the crisis of 2008 the mortgage industry has reinstated many of the rules and have made harder to obtain a mortgage; however there are still many government programs that allow for first time home buyer to purchase a home with as little as 3% down. The mortgage industry in United States is going through a transition faze, where many new rules are being written to avoid a repeat of 2008 housing crisis.

With over 30 years experience in the financial world Mark Mancino currently runs a very successful merchant service company.

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