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Government vs. Subprime Mortgage

In: Other Topics

Submitted By charjb
Words 1469
Pages 6
In history in 1929, there was a Great Depression where the stock market had crash. Wall Street has lost millions of investors it cause for unemployment, layoffs, and there were number foreclosure. Millions American were out of work. It nearly 10 years for America to regain from Depression after World War II brought jobs with industry regain recover. In 2007, there were loans were introduce it was part of economic factor. It had been 70 years since the last depression until the Second Depression (The Great Recession) hit for America in 2007 from a mortgage loan called subprime. The following will explain the background of the subprime loans. How the government had to intervene with subprime loan. Lastly, the policies taken place with primes and different programs.

The Subprime loans beginnings started in 1992, where Congress wanted to affordable housing, work on plan with Fannie and Freddie. Congress wanted the Department of Housing and Urban Development to look at their regulations. The chairperson for Fannie had a trillion dollar commenting to finance affordable homes. Homeownership had become an economic factor over the years in the mortgage market. Majority of home have loan through financial institutes. Yet, these subprime mortgage loans were given to individuals who barley sustained income and had failed credit. The purpose of the loan was suppose have a better opportunity of have homeownership. It was unfortunate subprime loans were aim toward minorities or low income areas. Lenders saw this qualities as a high risk offer the subprime loan, whereas prime loan. There subprime loan were offer to people who were not educated on loans. People did not know they had an adjustable fixed rate. Meaning the interest can flustered and get higher each month. Fannie and Freddie had nothing to do with whole subprime loan, but they...

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