American Families And Lending Companies Essay

1107 Words Dec 15th, 2015 null Page
POP! The bulging bubble of the housing market in the United States as previously predicted finally burst in late 2007. With several contributors that previously pumped air into the over-inflated housing bubble now losing steam, the burst of the bubble (or mortgage meltdown) with its remnants was experienced by many Americans whether on a personal or a national level. The burst of the housing bubble saw many home owners lose their homes to foreclosure; short-sales and even bankruptcy as the value of their once precious homes now sunk under water. For the next few years after the “pop” of the housing market, the pieces of American families’ financial remnants were slowly recovered and lessons from this burst were learned although at the painful expense of our economy and families’ financial well-being. Two key lessons American families and lending companies were taught from the mortgage bubble bursting; were the truths about creative lending and that opportunities availed themselves now for some home buyers to get into first homes despite the misfortune many existing home owners faced by losing their homes.
Buyers and lenders learned the harsh reality after the mortgage meltdown that “creative lending” was really risky lending to get under qualified buyers into homes. Subprime mortgages, where borrowers who had lower credit ratings and a higher propensity to default on a loan, were large contributors to the bulging housing bubble in the few years leading up to the…

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