What Caused the Crisis and Will it End Soon?
The answers are complicated but the Massachusetts Bankers Association (MBA) is endeavoring to set the record straight. First, there is no denying that the residential real estate market has been in distress all across America. Home prices have been declining from historic highs for quite some time. People have been seeing a reduction in the equity in their homes in almost every region of the nation.
The problems, however, have not stemmed from the operation of traditional banks. Before
the mortgage crisis began, the majority of mortgages in America were being originated by mortgage brokers and mortgage companies, not banks, and fueled by Wall Street investment firms. Many mortgage companies and mortgage brokers offered exotic mortgage products and subprime loans without strong underwriting standards.
Mortgages originating from non-bank companies and certain out of state lenders have been the primary source of the foreclosure problem. Subprime loans -- loans priced higher due to a greater credit risk for certain borrowers with lower credit scores -- can be a legitimate 
business if the proper controls are in place; but in many cases, the controls were not in place at enough mortgage brokers and mortgage companies. No one has a crystal ball but there are signs that the mortgage market could be rebounding, taking into account of course that it will vary region-to-region across the U.S. In Massachusetts and other areas of the country there has been a “flight to quality” as potential homebuyers move toward banks to satisfy their needs. The federal government’s concerted effort to bring down interest rates and offer first-time homebuyers a tax credit has created a new rush to purchase homes and refinance and that is good for the economy.
If you qualify for a mortgage from a Massachusetts bank there has never been a better time to search for that perfect home or refinance your existing mortgage. Interest rates are still at historic lows and there are an astounding number of more affordable homes available for sale in the current buyer’s market.
