What exactly is the subprime mortgage crisis? - subprime mortgage lists
Has anyone a simple answer to this question? another list a few points, in contradiction to my understanding. That's what I know.
Banks lend money to borrowers with poor credit at a lower rate (high risk) of interest to attract them.
that default on their payments to the bank (I guess they pay every month to your debts?).
and the reason that the bank lends money to borrowers with poor credit, because they want to reach a larger market and earn more interest (but not as high as the interest rate preferred)
the volume of people to a standard shaft in the economy, because it can not pay. what happens is my sound and explanation?
Subprime Mortgage Lists What Exactly Is The Subprime Mortgage Crisis?
1 comments:
He is absolutely right about the reasons for the crisis, but a little more for him than you have listed. The credit score is a good indicator of the risk of default in the same way as the qualifications of the default risk of securities to investors and potential investors are offered. Companies usually offer the risk of the financing of social housing are not high risk financing. The more they fled, the demand for financing of subprime mortgages. In addition, homeowners that are more rejected, the more desperate they become less able to accept in order to get the financing.
Along Came a few entrepreneurs with high risk tolerance, which saw little use, if only one level of subprime borrowers by reducing the minimum requirements just a little. "Now, contractors, no credit to anyone for a price. An example is the variable interest rate with a kind of outreach that all of what the interest rates for buyers who can afford to pay beats lower payments, anniversaries , where the rate ranged from 1-2% per year faster wiIt would be higher than the interest rates again, and thus interest rates will be higher than what would have happened over the course once. Another example is someone with low income and still no more than 35% of salary for a mortgage payment, they took on the director and the establishment of all the loans are interest payments. Another feature is the 80/20 loan, which can be 20% down payment, virtually guarantees the acceptance, because the bank can now be sure that the owner has to offer to protect a major investment in the homeland, cases of foreclosure, the Bank for sell at least 80% of the value, and therefore nothing to lose, but these loans were for loans of 20%, the purpose of the grant requirement of 80% losses. Business was good. To invest some of the largest banks in many of these activities, because they made money from the first two years.
But many of these products are equally dangerous and possibly riskier than originally estimated and, finally, of course, achieved payments to the owners, the commercial travel, have indeed moved,an emergency that was not bound to the loss of his job or had a variable rate, which rose faster than they were willing or able to house and therefore had more executions than in large classes.
Also at that time were able to fraudulent schemes where people get rich themselves back to the houses, to buy low and sell high, but what happens, it is only sold at inflated prices, they were not by that which they were misled investors, with mortgage she could not afford it stuck. Since the prices are too high could lose the owner if they were sold, many simply allow foreclosure. The worst thing is that many of these applications are completed to higher real wages than would be too overwhelming demand for mortgages, even if the investor had no mortgage or rent to deceive.
Also at that time were redundancies in the north, where some cities decline in population and households will only be excluded by the left, while the family moves from state to work. Current auctions in the north, home sales in thes 20% above the market value.
First there was a snowball effect, but to keep the financing of subprime mortgages, reducing the prime rate, liquidity injections and guided by the government to reduce this crisis, just a domino effect in which the time now. Over the next two years, it could prevent an act of Congress or to minimize, to facilitate the crisis in the future or to the property. Finally, the banks falling into the same trap again see the employers to finance the deficit with subprime dollar signs in their eyes. It took a long time, the S & L crisis of the 1980s, but do not think it will take some time.
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