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Bank of America Corp (BAC), Wells Fargo & Co (WFC): When’s The Next Crash?

With banks working so hard to restore their pre-crisis profits, prospective homebuyers who don’t have even this basic knowledge stand little chance of fending off aggressive mortgage-loan salespeople whose compensation is directly tied to the volume of mortgages they’re able to process.

The next threat
What will cause the next mortgage crisis is far from certain at this point. Interest rate rises will affect some people, although low fixed rates have gotten most homeowners away from the adjustable-rate mortgages that caused so much trouble during the 2000s. What’s more likely is a renewed uptick in home prices, again challenging affordability and again forcing people to stretch to buy homes.

Whatever the situation, though, it’s crucial that people understand what they’re getting into before they take on the biggest financial commitment in their lives. Otherwise, it’ll just be a matter of time before the next big mortgage crisis comes about.

The article Why the Next Mortgage Crisis Is Inevitable originally appeared on and is written by Dan Caplinger.

Fool contributor Dan Caplinger owns warrants on Wells Fargo & Co (NYSE:WFC), Bank of America Corp (NYSE:BAC), and JPMorgan Chase & Co. (NYSE:JPM). You can follow him on Twitter @DanCaplinger. The Motley Fool recommends Wells Fargo and Zillow Inc (NASDAQ:Z). The Motley Fool owns shares of Bank of America, JPMorgan Chase, Wells Fargo, and Zillow.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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