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Figure 2. Floating rate lending
The interest rate on mortgage depends on the policy and the interest rate of the
FED. So, between 2004 and 2006, when the Federal Reserve System raised interest
rates, it caused higher mortgage interest rates. Many owners could no longer afford
monthly mortgage payments and began purposefully declare defaults on the mort-
gage. This had not happened before. In each case of delay borrower has a definite pe-
riod of time for the repayment of debt, then the lender can begin legal action on al-
ienation of the rights for discharging a morgage and put it up for auction. Here is the
average percentage of expropriations of property for 10000 houses [3].
Figure 3. The average percentage of property expropriation (10000 houses)
So, why mortgage borrowers have declared defaulted? The combination of two
factors worked here. Firstly, the average housing price began to fall because demand
has fallen, and this has spurred focused defaults on the mortgage, as the cost of house