Subprime Mortgage Lenders - a good idea, out of control

The original concept of the subprime mortgage market began as a good idea, it seemed most of the population in general. Given the possibility that people who work hard and have a regular income and the opportunity to live their mortgage payments or payments, car or credit cards in a normal life. In other words, they were able to keep pace with its neighbors. "People began to buy their dream house in the suburbs, and everything was happy.Unfortunately it started to go wrong. Jobs began to be outsourced. Were the steel mills and other important works in the area of production for many years have decided to stay and people begin to lose their jobs.

Meanwhile, banking, everything went terribly wrong. More money for the loans they needed to sell loans to businesses, a practice known as derivatives. These are the mortgages are packaged and sold as toolsThe inclusion of the assets of banks and securities dealers.

When people start losing jobs and going into foreclosure derivatives lost value, and a chain of events that have caused donors at risk of exclusion. Once the cycle starts down, and banks became insolvent. Soon followed by a domino effect. Because of the economic situation and the people who came in late, forcing lenders at risk of calling their mortgages has led tomore people leave their mortgages has led to the derivation of the fall in value. Due to liquidity problems that have occurred in small banks to control and not raise interest rates so high, they were out of reach for most people, on average. Soon some of the major banks have begun to fail.

The increase in interest rates cause more people continue to suffer, so that the domino, so the collapse of major banks and guidesBanks like Lehman Brothers, Fannie Mae and Freddie Mac, to name a few. Due to problems with the mortgage banks, the Federal Reserve and the Treasury, with the help of the Congress of the risks, recovery plans have tried our country into a financial company walk again. It took several years to create this financial crisis, then we can expect that this can be fixed overnight.

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