Mortgage And Real Estate Meltdown Essay

801 Words Dec 7th, 2015 4 Pages
There are several lessons that can be learned from the mortgage and real estate meltdown that happened a few short years ago. In the year 1999, subprime mortgages for purchasing a home were becoming increasingly popular. Subprime mortgages are mostly for people who have a less than perfect credit. These mortgages had higher interest rates and the payments can fluctuate and inflate from year to year or even from month to month due to the unconventional terms that are included. The idea of subprime mortgages was to make purchasing a home more accessible to people with less than perfect credit and normally they do not have very much money saved up. This idea was created with the best intentions, but unfortunately, it backfired. Some people saw subprime mortgages as a bad idea, and it turned out they were correct. The market continued to climb from 1999 to 2005 and people were getting equity in their homes that they purchased. It seemed as if everything was going smoothly, until the bottom fell out. In 2007, it appeared that the entire subprime lending market was in trouble. The market was continuously dropping and so were home prices. Soon, people owed more than their house was actually worth. Due to the unconventional terms in their loan, the loan payments had increased and people were unable to make payments to their mortgage, causing them to lose their homes to foreclosure and more than likely having to file for bankruptcy. The market continued to decline. On September…

Related Documents