Mortgage Crisis Paper

Mortgage Crisis Paper

  • Submitted By: JoeStar1961
  • Date Submitted: 03/09/2009 4:51 PM
  • Category: Business
  • Words: 1063
  • Page: 5
  • Views: 1

Running head: SUB-PRIME MORTGAGE CRISIS Sub-prime mortgages: What happened, why it happened, and when will it get better. Joseph M. Starosta Cardinal Stritch University Kim Hamm MGT 405 BSM 01-2009 February 18, 2009 Submitted to the faculty of Cardinal Stritch University in partial fulfillment of the requirements for the degree of Bachelor of Science in Management The sub-prime mortgage crisis is affecting millions of American home owners across the country. What happened to the homeowners and why are they at risk of losing out on the American dream of owning their own home? Washington Post writer, Carol D. Leonnig, Ryan Barnes from Investopedia.com, Jason Ryan of ABC News, and Sara Hansard of Investment News.com explain what happened. While John Atlas and Peter Dreier of The American Prospect, and The North County Times of California explain the origins of the problem. Janet Morrissey of Time Magazine will inform the reader on how bad the crisis will get, while David Bogoslaw of Yahoo News and writers from The Kansas City Star newspaper will help find a solution to the problem. ( Barnes, R. para 17. 2007). The logic behind this was that real estate prices were rising so fast, that this 125 % loan would be above value in less than two years. Record low interest rates and loose lending standards pushed real estate prices to record highs across the United States. Existing homeowners were refinancing in record numbers, tapping into recently earned equity that could be accessed with a few hundred dollar investment of a home inspection. New home sales stalled and median sale prices stopped climbing. Interest were still low, but slowly began to rise. Inflation fears threatened to send them higher. Suddenly all of the easy to underwrite mortgages and refinancing that had already been done, along with the first of the shaky ARMs, written one to two years earlier were beginning to come due. Default rates began to escalate and many of the shaky sub-prime...

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