I was just reading an article from Market Insider and they say that lenders posted an average loss per mortgage last year. Can you folks enlighten me as to how that happens?
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If there’s an economic downturn then homeowners may lose their jobs and may stop paying their mortgages. Now the mortgage company isn’t recovering the money that they originally loaned out. Potentially hundreds of thousands of dollars. And then the downturn in home prices means that the bank may not be able to recover the loan even after retaking possession of the house to re-sell, which could take many months or years in any case.
Total up all the good mortgages vs the bad mortgages and it’s possible to be, on average, losing money.
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