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Housing Crisis

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What led to the housing crisis?
Owning a home can be considered one of the biggest achievements in a person’s life. Whether it’s starting a family, becoming an adult, or running a business, becoming a home owner is an exciting thing for most people. However, the housing crisis of 2007 destroyed many dreams for recent home owners and sent the country into a nationwide panic that led to the biggest recession since the Great Depression. The housing crisis surprised many people since home prices has been steadily increasing. With the positive trend of prices and low mortgage interest rates, it was becoming very easy to receive a loan with low monthly payments. Home prices were increasing so quickly that many home owners chose to refinance to receive …show more content…
In October of 2008 the government implemented TARP. TARP is “the Troubled Asset Relief Program, created to implement programs to stabilize the financial system during the financial crisis of 2008” (“About TARP” 2014). After many banks fell is when the stock market dropped a great deal, a clear sign that financial struggle was soon to follow. “Treasury established several programs under TARP to help stabilize the U.S. financial system, restart economic growth, and prevent avoidable foreclosures” (“About TARP,” 2014). These were considered “emergency programs” and included different programs for housing, the auto industry, the credit market, executive compensation, and bank investments including a huge investment in AIG. Investing in AIG and other major investing companies prevented a major setback in the recession by creating better guarantees on bank transactions, money market funds, and multiple liquidity facilities from the Federal Reserve as well as extra backing for Fannie Mae and Freddie Mac, two of the major financial institutions that play a big role in the United States economy. In addition, all of the programs, especially in the auto industry, saved millions of jobs across the nation (“About TARP,” 2014). Within the housing programs, two separate programs were created to help prevent potential foreclosures as well as create lower …show more content…
If it had, President Obama wouldn’t feel the need to extend the deadlines for the Making Home Affordable or Hardest Hit Fund programs. It’s no secret that there are still an extraordinary amount of people struggling, and states suffering from the major setbacks of 2008, however, given the severity of the situation, the programs are doing the best they can and helping out millions of American’s. If there was a better, more efficient solution, it would go into effect immediately. Most importantly, if history were to repeat itself another time, reaction times on the programs would be much faster and hopefully restore everything at a faster

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