|City/Town: • Apollo Beach
|Location Class: • Residential
|Built: | Abandoned: • ~2014
|Status: • Demolished
|Photojournalist: • David Bulit
Article Under Construction
The owners of this mansion in Apollo Beach, Florida were victims of the subprime mortgage crisis, a nationwide financial crisis that occurred between 2007 and 2010, and contributed to the Great Recession. The crisis was triggered by the collapse of a housing bubble in the 2000s, leading to a massive number of foreclosures and people who were unable to pay their mortgages.
Historically, people who have below-average credit scores, provide small down payments, or sought high-payment loans found it difficult to obtain a mortgage. That changed in the early-2000s as high-risk mortgages became available from lenders who funded mortgages by repackaging in groups that were then sold to investors. Houses were also thought to be good collateral at the time so lenders thought to give anyone a mortgage because if they defaulted on it, the lender would foreclose on the property which was increasing in value. These mortgages are known as subprime mortgages, oftentimes having low initial interest rates to trick the buyer into thinking they could afford them before the interest rates rapidly increased over a number of years.
Initially, investors profited because rising house prices protected them from losses. When high-risk mortgage borrowers could not make loan payments, they simply sold the house at a gain to pay off the mortgage and pocket the profits. When house prices peaked though, selling homes for settling mortgage was less viable and mortgage loss rates increased for both lenders and investors. New Century Financial, the largest U.S. subprime lender, filed for Chapter 11 bankruptcy with several subprime lenders began closing in its wake. Lenders were no longer offering subprime or high-risk loans which lowered the demand for houses, therefore lowering the price of houses. Prices plummeted so far so buyers could no longer sell their homes to fully pay off their mortgage leading to an unprecedented number of foreclosures across the nation.