House of Cards Lecture4

House of Cards Lecture4 - REE 6930 Extra Credit Lecture...

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REE 6930 Extra Credit Lecture Form Your Name:_______________ _______________ Video Lecture:_____________House of Cards____________ Paragraph summary of the lecture: The current housing crisis can be traced back to the September 11, 2001 terrorist attacks on the World Trade Centers. After those attacks the Fed Chariman, Alan Greenspan, cut interest rates to spur American consumer spending. These reduced interest rates led to slashed mortgage rates, which enticed Americans to buy homes. As the rate of home purchases went steadily upward, so did the prices of the homes (this is a perfect representation of supply and demand). The result was that home prices grew so much, that now many Americans could not afford to buy them. To fix this problem, California invented the sub-prime mortgage. These new mortgages allowed Americans who did not qualify for traditional mortgages, because of insufficient income or poor credit, to be able to buy a home. These sub-prime mortgages were then packaged into Mortgage
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