Ameriquest was one of the country’s largest sub-prime mortgage lenders until it imploded in September 2007. According to a former Ameriquest broker, “One day we were hosting lavish parties, and the next, movers were carrying out our desks and laptops”.
A key factor in the subprime mortgage financial crisis was that mortgage companies allowed potential borrowers to state their income without any process of verification resulting in over borrowing, spiraling debt and a full-blown international banking crisis.
So what went wrong? “Easy mortgage approvals created a large pool of buyers which not only drove housing prices up, but lead people to believe that borrowing against their homes would produce a windfall,” states Ilan Bracha, president of Bracha New York and co-founder of Keller Williams NYC and B+B Capital.
Fast forward to 2017. The situation in the U.S., if not fully recovered, appears to be in order. The normalization of monetary policy by the Federal Reserve late in 2015 marked the official end of the financial crisis. The S&P 500 and the Dow Jones have long overtaken pre-crisis values, and since the election, have reached new highs.
“At the end of the day,” says Bracha, “strong demand for luxury housing by both domestic and foreign buyers is creating an inventory in short fall. Sales are healthy but for some potential buyers, mortgages can be more difficult to obtain.”