The Housing Crisis Essay

790 Words Dec 7th, 2015 4 Pages
Imagine yourself driving down your neighborhood, and as you pass by every home all there is to see are foreclosed or for sale signs. Many people that once was your neighbor is suddenly gone and little by little your neighborhood starts looking like a ghost town. This was one of the horrific aftermaths due to the Mortgage crisis from 2007 whom left thousands of people to lose their homes. To have a better understanding, The Subprime Mortgage crisis also known as the “mortgage mess” was an increase in high-risk mortgages that went into default in 2007 where Interest rates rose, home prices fell, and borrowers defaulted on loans. Making it a factor to the most severe recession in decades. Due to this financial crisis banks went bankrupt, homeowners could not afford their homes, Wall Street firms were lost, and Hedge funds that invested in mortgage securities also were contributors to the global recession. The journey of the Housing Crisis begins with the Housing bubbles which was the trigger to this mortgage mess. According to a housing bubble is “an economic bubble in local or global real estate markets. It is rapid increases in the valuations of real property”. The rapid increases became decreases in home prices and mortgage debt that is higher than the value of the property. Interest rates were increased 5.25 percent 17 times more. The Federal Reserve Board lowered the interest rates in fear of an economic crisis.
That was the initiation leading to the…

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