New Mortgage Guidelines Changed Borrower Attitudes

The evidence is in: Banks inadvertently took on more risk than they could handle during the housing bubble. Now, new research attempts to explain why. How did this fundamental shift affect the attitudes of borrowers? Pretty drastically, it seems.

The new study, authored by Clifford Rossi for a research arm of the Mortgage Banker's Association, claims banks took on greater and greater risk by adopting new kinds of exotic mortgage loans that were originally developed for sophisticated borrowers, not the general population.

The eventual consequence: Now the average homeowner who's having financial trouble is less emotionally invested in paying the mortgage first.