Article Review EC209

Article Review EC209 - Article Review 1 Running Head:...

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Article Review 1 Running Head: ARTICLE REVIEW What REALLY Caused the Mortgage Crisis - And What to Do Now Loralee Foster October 11, 2009 Article Summary
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Article Review 2 In 2008 the United States began facing a financial crisis caused by sub-prime mortgage loans and adjusted rate mortgage (ARM) loans. The banking industry was lending money to high-risk borrowers with poor credit and very little credit checks were completed. This concept was allowing individuals to purchase homes that were above their means with the anticipation of higher incomes and lower interest rates in the future. Real estate was booming and sellers were maintaining high profits. The mortgage companies were lending excessive amount of money and became greedy. They were worried about now and not the future. Everything possible was being done to get a person in to a home based on what they could afford at the time. The problem begins when the interest on the sub-prime loans and ARM loans come due. By this time, most of the borrowers still maintained a less than perfect credit rating and could not qualify for better mortgage rates. Sub-prime loans defaulted causing families to be evicted and foreclosures have increased
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This note was uploaded on 04/18/2011 for the course ECON 209 taught by Professor Horvath during the Spring '08 term at DeSales.

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Article Review EC209 - Article Review 1 Running Head:...

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