Wait a second!
More handpicked essays just for you.
More handpicked essays just for you.
U.S. Subprime Mortgage Crisis: Policy Reactions(b) conclusion
2008 subprime mortgage lending crisis
Real estate subprime mortgage crisis essay
Don’t take our word for it - see why 10 million students trust us with their essay needs.
The subprime mortgage crisis
The argument over who is at fault for the housing market collapse has been a heated issue amongst government, politicians, banking institutions, and mortgage lenders. The subprime mortgage crisis is an ongoing financial issue and real estate nightmare for the United States economy. A dramatic increase in mortgage delinquencies and foreclosures has caused a significant adverse effect on banking institutions and financial markets. Due to this mortgage crisis, the housing market subsequently has crumbled resulting in a record numbers of home foreclosure and more are still looming in the horizon. For many, the dream of home ownership has become a real nightmare. Who is really at fault? Should minorities groups share part of the blamed for recklessly accepting these loans and later defaulting, realizing they can no longer meet their obligation? Should banking institutions, mortgage lenders, brokers, investors and credit bureaus be held accountable for this crisis? Should government share some accountability for their inaction and for not protecting victims of predatory lending?
An argument can be made that someone should be held accountable for the subprime mortgage situation. The main focus now is to preventing a continuous meltdown. The first step to cure the situation is taking immediate and corrective action. Kevin Alexander Gray states “We‘ve got to do more to stem the tide of foreclosures and stabilize communities throughout the country,” (Gary, 2009). In order to thoroughly understand the impact this crisis has had on the economy, it will be important to look at what has really prompted this housing meltdown. The immediate cause or trigger of the crisis was the bursting of the United States hous...
... middle of paper ...
... north. Human Events, 65(35), 1-10.
Dodd, C. U.S Senate Committee, Banking, Housing and Urban Affairs. (2007). Create, sustain,
preserve and protect the amercian dream of home ownership; stop abusive practices in the housing market Washington, DC: Retrieved from http://banking.senate.gov/public/index.cfm?FuseAction=Newsroom.PressReleases&ContentRecord_id=e2e529c0-29ee-43db-a314-ecafb3bdee32&Region_id=&Issue_id=
Gray, K. (2009, December). Fending off foreclosure. The Progressive, 29-30. Available from
Master FILE Premier, Ipswich, MA. Accessed March 3, 2011.
IBD. (2009, January 16). Fannie, freddie and now, hannie. Investor’s Business Daily. p.N.PAG.
Retrieved from EBSCO host.
Stiglitz, J. (2008, September 17). How to prevent the next wall street crisis.
Retrieved from http://www.cnn.com/2008/POLITICS/09/17/stiglitz.crisis/index.html
In the essay “The Mansion: A Subprime Parable,” Michael Lewis unfolds the real face of the American dream. He talks about his own personal experience in his look out for a house and his struggle with the house he rented. Most Americans have bought houses they cannot afford. Banks offered loans, they have lent mortgages that many don't have enough financial resources to pay them back. Agents have falsely guaranteed that real estate prices will be in constant rise, they promised them that there will be no declination in prices.
As the lease of my apartment is coming to an end it had me thinking of achieving my own American Dream of home ownership but as I do my research I find the dream is far from coming true. I am sure that the issue of housing prices and rent rates are what most of us Bay Area residents talk about and debate. It is an issue that needs to be addressed by the officials of the area, city mayors, affordable housing committees, social justice activists,lawmakers, and even employers. Skyrocketing prices, low inventory, and investors’ bidding wars are not only pushing the middle and lower classes out of San Francisco and the Bay Area out but will completely eliminate them.
A majority of mortgage defaults that Americans used were on subprime mortgage loans, which were high-interest-rate loans lent to people with high risk credit rates (Brue). Despite knowing the risks, the Federal government encouraged major banks to lend out these loans to buyers, in hopes, of broadening ho...
Mortgage loans are a substantial form of revenue for the financial industry. Mortgage loans generate billions of dollars in the financial industry. It is no secret that companies have the ability to make a lot of money by offering a variety of mortgage loan products. The problem was not mortgage loans but that mortgage companies were using unethical behavior to get consumer mortgage loans approved. Unfortunately, the Countrywide Financial case was not an isolated case. Many top name mortgage companies have been guilty of unethical behavior. Just as the American housing market was starting to recover from its worst battering since the Great Depression, a new scandal, an epidemic of flawed or fraudulent mortgage documents, threatens to send not just the housing market but the entire economy back into a tailspin (Nation, 2010).
In “The Big Short”, this movie about the economic collapse of 2008 in America highlights how Americans of all racial backgrounds were hit hard when the housing market collapsed. The film provides a very compelling argument and describes how the market crashed because banks began to give out more unstable loans out to people in order to sell more properties, which eventually led to the housing market to be built upon millions of risky loans. This practice grew until the housing market became too unstable because of all the risky loans and resulted in an economic crash. The housing market collapse led to millions of Americans to lose their homes because of foreclosures and led to massive amount of homelessness and unemployment since the Great
Economic troubles can be prevented through access to affordable and adequate housing that is within the means of an individual’s income. With advances in production and design, the American Dream can become a feasible reality for all Americans.
subprime mortgages were major factors of the collapse of the 2007-2009 economy collapse. All of America suffered from the 2008 recession.
Individuals like the two young and rambunctious mortgage consultants portrayed in the film gave loans to anyone and everyone that could sign the paper, regardless of the recipient’s ability to pay the loan in full. It is doubtful that all consultants fully understood the ramifications of their actions, but undoubtedly the overall disregard for consequence was the start of the collapse. Mortgage consultants mislead and tricked people into loans they could never afford by playing on their desire to live the American dream. Distributing adjustable rate loans to individuals without jobs, without collateral is unconscionable. Unfortunately, from their perspective they were helping these individuals. In a twisted way, these consultants were acting ethically from a utilitarian point of view. The consultants won because they received utility in the form of a bonus for distributing the loans, and the loanee won because they could now afford the home of their dreams. What the consultants didn’t consider in their calculations were the long term results and utility of their actions, unethically building the flawed foundation of the housing
During the boom years from the mid 90’s to 2006 in the U.S. housing market experienced a boom. During this period many mortgages were offered to people who were in the high risk category of defaulting. This was very relevant in the investments bankers took, including in the profile of mortgages they gave out. The culture that evolved was get as many mortgages on the books as possible, even if the recipient of the mortgage was not a sound investment and in many cases had not the wages to cover the mortgages they received from the banking institutions. Ridiculous coverage of 100% mortgages was being issued to folks who could never ever pay back the loan. These customers did not have to go through the normal credit checks, these loans became known as subprime loans. These high risk mortgages were processed as securitisation; this is a financial practice of combining mortgages into one large pool. Most of the pools became mortgage – backed security (MBS) and were traded on the financial markets by firms such as Fannie Mae and Freddie Mac. These MBS delivered high rate of return for the traders increasing their bonus but were not sound investments for the bank. This careless disregard of the compan...
(Murphy, 2008) The US banking sector was first hit with a crisis amongst liquidity and declining world stock markets as well. The subprime mortgage crisis was characterized by a decrease within the housing market due to excessive individuals and corporate debt along with risky lending and borrowing practices. Over time, the market apparently began displaying more weaknesses as the global financial system was being affected. With this being said, this brings into question who is actually to blame for this financial fiasco.
The subprime mortgage crisis is an ongoing event that is affecting buyers who purchased homes in the early 2000s. The term subprime mortgage refers to the many home loans taken out during a housing bubble occurring on the US coast, from 2000-2005. The home loans were given at a subprime rate, and have now lead to extensive foreclosures on home loans, and people having to leave their homes because they can not afford the payments. (Chote) The cause and effect of this crisis can be broken down into five major reasons.
“One out of every two hundred homes will be foreclosed every month, making 205,000 new families enter into foreclosure,” Mortgage Bankers Association. The housing industry in the United States is undergoing an unfortunate crisis. There are way too many homes being foreclosed, which cause a ripple of problems.
Buying and owning your home is part of the American dream. Although the dream itself has since changed, the home still remains the main focal point. Today owning a home doesn’t necessarily mean a house. People now buy duplexes, cooperative apartments, and condominiums. For some families it could take up to a couple of generations before it’s able to have the capabilities of buying a home. To many people it means a certain achievement that only comes after years of hard work. It is a life altering decision and one of the most important someone can make in their lifetime. The reasons behind the actual purchase could vary. Before anything is done, people must understand that it’s an extraneous process and it is a long term project.
The “bad” mortgages banks were writing, high interest rates, and world financial uncertainty were the main culprits to the financial crisis of 2008. “Some three years after the collapse of the financial industry, a bipartisan report from the Senate’s Permanent Subcommittee on Investigations has determined that banks, regulators and credit agencies ...
“Interview on the US’s subprime crisis” Introduction The subject of this interview is “the causes and effects of the subprime mortgage crisis” the core players in this industry include the homebuyers and business people or investors. The interviewer’s name is Aimee Peters, an investor in Texas. John Holmes has been in the home selling business since 1994 and he has vast experience and knowledge in this industry. This interview seeks to examine the effects of subprime mortgages on homebuyers (consumers) and home sellers, the business people. Summary of the interviewers’ views Background and immediate cause of the subprime crisis The United States’ subprime mortgage crisis can be summed as a set of actions and conditions that were fundamental attributes of a financial crisis and ensuing recession, which became evident and visible in 2008.