The financial crisis of 2008, which has also been referred to as The Great Recession and the Global Financial Crisis of 2008, began with the downfall in the housing market in the United States. Thee were many factors that played into this housing market turn for the worst during this time. Some of these factors included: subprime loans, the housing bubble that peaked in 2005-2006, government policy and regulation, and faulty mortgages. This housing market turn affected more than just the housing market with all the personal and government additions involved. In turn the unemployment rate went down with this event, evictions and foreclosures of houses sky rocketed, faulty and risky loans were also issued that created problems in the banking
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This was expansion, with lower interest rates, economic booms, and most people living in houses they couldn’t really afford if you looked into their finances. This is what later created negative home equity balances, and forecloses along with many evictions. Before the collapse of the housing bubble more and more people thought at least that they were “living the American dream”.
What exactly lead to all of this? Government policy and individuals are at equal stake to blame for much of the housing bubble collapse that lead to the economic crisis and start of the recession in 2008. Before 2008, legislation made it easier for individuals to apply for mortgages that were adjustable rate mortgages. With these mortgages, subprime mortgages were given out without much thought, and the credit resources needed to buy a house were at a minimal. With both of these factors in play, no one was excepting the downturn that occurred.
With the Federal Community Reinvestment Act (CRA) was enacted in 1977 under President Jimmy Carter. The CRA was an act to encourage banks particularly commercial banks to help meet the needs of borrows in all segments of local communities in the United States. This act was passed to particularly help lower middle class and lower income neighborhoods have more home ownership. This act also produced rules against discriminations against low-income neighborhoods with credit approvals for buying a