Why is it the big banks' fault for all the foreclosures in America?

Some people think that the foreclosure epidemic in America is the fault of the big banks because of the creation of so-called “sub-prime mortgages.” Sub-prime mortgages are designed to give people who would not normally qualify for a mortgage loan the chance to get a home loan.

This means that people with bad credit histories, low income jobs or other financial woes who would not normally be able to own a home could buy a home through sub-prime mortgages.

Sub-prime mortgages became very popular in the decade leading up to the foreclosure epidemic. They work by offering the homebuyer the chance to get a mortgage without having to make a down payment. They also often offer very low introductory interest rates, which makes them very attractive.

However, many of these loans have adjustable rates, meaning that after the first year of the mortgage, the interest rate resets and becomes adjustable. Often times, adjustable interest rates can change from month to month. This makes it difficult for homeowners to predict what their monthly payment will be and to keep up on payments without a great supply of cash on hand.

Since most sub-prime homeowners had poor financial situations to begin with, they were unable to keep up with their payments and went into foreclosure.

Big banks made a lot of sub-prime mortgages in the years leading up to the foreclosure crisis. Many people feel it is their fault for offering mortgages to people who desperately wanted to own homes but weren't in a position to do so. Of course, there are other factors in the foreclosure epidemic, such as unemployment and high property prices.

It’s the buyer's responsibility to make sure that they don't take on a loan they can't handle, even if the bank tells them they should. However, this is generally why many people feel that the big banks deserve the blame for the foreclosures in America.