The Subprime Mortgage Crisis a.k.a. The Great Recession. The Greatest Recession Powerpoint Ever!. What are subprime mortgages?.
PowerPoint Slideshow about ' The Subprime Mortgage Crisis a.k.a. The Great Recession' - csilla
An Image/Link below is provided (as is) to download presentation
Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.
Between 1997 and 2006, the price of the typical American house increased by 124%
The housing bubble resulted in quite a few homeowners refinancing their homes at lower interest rates. USA household debt as a percentage of annual disposable personal income was 127% at the end of 2007, versus 77% in 1990.
"The financial market crisis that erupted in August 2007 has developed into the largest financial shock since the Great Depression, inflicting heavy damage on markets and institutions at the core of the financial system."
International Monetary Fund, World Economic Outlook, April 2008
One of the major problems that came out of this crisis was that: Billions of dollars were lost in mortgage backed securities.
What is a mortgage backed security? “Once a bank has made thousands of mortgage loans, they often package up all the loans together and sell them to investors as bonds.”
It was believed that these bonds were very safe investments due to the fact that home prices were on the rise. If an individual was unable to pay the mortgage, it was thought that the homes would easily just be seized and sold.
There was a total of 2.2 million foreclosures in 2007, up 75% from the roughly 1.26 million RealtyTrac reported in 2006. RealtyTrac said 1% of all US households were in 'some stage of foreclosure' in 2007, up from 0.58% in 2006.
By the end of 2008, home prices had dropped 20% from their 2006 peak.