Mortgage Meltdown Case Study

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After the Real Estate and Mortgage Meltdown several years ago, many buyers who were affected by the economy have “boomeranged” back into the market that brought our country to a meltdown. Boomerang buyers are victims of foreclosure who are re-entering the real-estate market. In 1998, banks were allowed to “gamble”; they were giving out a large amount of loans and didn’t help when low interest rates fueled the apparent boom of the economy. The derivatives were not regulated and like almost everything that is not regulated turns into complete chaos. Private lenders and commercial banks relaxed their standards and anyone who sought out for a home loan received one. The housing market was booming, but only for a short time. Until our market collapsed and affected all Americans—especially new home owners. …show more content…
These boomerang buyers have been relying on the rent-to-own option in the economy. “Buyers” or should I say renters see the rent-to-own option as the best one yet, although this option includes interest rates and make the total cost comes to higher sum than the original price, it is the best option because there is a smaller risk rather than owning. I can explain why boomerang buyers’ best option is to choose the rent-to-own option before actually purchasing real estate.
For example, let’s say a real estate agent or owner puts up real estate on the market, rent-to-own. A buyer, after the economic downfall, decides to “boomerang” and the seller puts a certain percentage fee on the buyer. The rent price and a portion of the option fee accumulate over an annual period, with other fees. The renter can walk away from the property without paying for the full house price, because it is rented. In summary there is less risk to actually purchase the whole real estate than there is to rent and eventually own if

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