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    Mortgage Industry

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    Do you think what's going on with the Mortgage Industry now is a result of poor Risk Management, Fraud or mismanagement?

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    Solution Preview

    The Credit Crisis that is going on right now is a result of all three - poor risk management, Fraud and mismanagement.

    Poor Risk Management: Role of housing investors and Speculators
    Speculation in real estate was a contributing factor. During 2006, 22% of homes purchased (1.65 million units) were for investment purposes, with an additional 14% (1.07 million units) purchased as vacation homes. During 2005, these figures were 28% and 12%, respectively. In other words, nearly 40% of home purchases (record levels) were not primary residences. NAR's chief economist at the time, David Lereah, stated that the fall in investment buying was expected in 2006. "Speculators left the market in 2006, which caused investment sales to fall much faster than the primary market."

    While homes had not ...

    Solution Summary

    What the expert thinks is going on with the Mortgage industry as a result of poor risk management, fraud or mismanagement are determined.