Fight Blight: Cities Sue to Hold Lenders Responsible for the Rise in Foreclosures and Abandoned Properties

In the aftermath of the subprime mortgage meltdown,l Americans have been forced to change the way they view homeownership. Once considered to be the average person's most valuable asset, for many, homes have transformed into a burdensome liability. Spurred by the expansive securitization of the residential mortgage industry, many subprime mortgage lenders dismissed traditional lending standards and issued what some call "liar," "naked," or "no doc" loans, which were loans approved by lenders based on falsified or little-to-no documentation about the borrower's income or assets. Some of these loans were given to borrowers with poor credit histories and in amounts exceeding their ability to repay.

These mortgage loans often had adjustable interest rates, which would then "reset" (i.e., increase) after two or three years, resulting in monthly payments greater than what the borrowers could afford.