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The original culprit of mortgage crisis is the United States Congress. Approximately five years ago, U.S. Congress pressured lending institutions, including banks and mortgage lenders provide affordable housing to those who have low income. If those lending institutions did not follow through what Congress purposed, no doubt Congress would impose new legislature which would financial hurt these lending institutions. Eventually, these lending institutions offered incredible opportunity for many people to afford to buy their first homes, putting aside their guide-lines normally followed or setting aside income requirements and proof of income to validate a mortgage application. Also, offering extremely low initial interest rate (At that time interest rates were very low, just before previous Chairman of the Federal Reserve Allen Greenspan started to raising interest rates) as variable rate mortgage. Many people especially those who had low income, where able to offered to get a variable rate mortgage, however the interest rates on these mortgages where to adjust three to five years later, seemed to many not an important issue, considering at the time interest rates were very low. During the following three to five years, interest rates moved up higher, and eventually those variable rate mortgage where adjusted (Three to five years later) reflecting a substantially higher rate. During the past three to five years, most homeowners of these variable rate mortgages had not seen any substantial or slight increase in their income and their home expenses during that time steadily increased (Energy costs, home insurance, and miscellaneous including food expenses). After their mortgages adjusted, reflected a higher monthly expense, no doubt many where unable (eventually become unable) offered to pay their mortgages and fell into foreclosures.

Now the United States Congress placing the blame for the mortgage crisis totally upon mortgage lending institutions, rather than taking at least part of the blame. Certainly, no doubt there has been corruption or unscrupulous lenders who have attributed to part of the mortgage crisis.

Despite Congress and President attempts to in courage mortgage lenders to help or prevent home owners from going into foreclosure, only a limited number of homeowners will benefit. Learning from past mistakes, mortgage lenders have become restrictive to refinance or provide new mortgages unless applicants can provide proof of income and good outstanding credit. Also, Unfortunately Congress has not acted upon new legislation President Bush suggested provide tax relief for homeowners, who were lucky to have their mortgage lender put aside a portion (reduce their refinanced loan) of their refinanced loan. Currently, if a mortgage lender reduces a refinanced loan (Example: From $220,000 to $200,000 mortgage), the difference is considered a capital gain, and becomes taxable to be paid by the homeowner. President Bush would like Congress to pass legislature put aside that capital gain tax, thus providing relief to those homeowners.

Learn more about this author, Leonard Konis.
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