America’s subprime mortgage crash late in 2007 has impacted across the world and caused a recession in the US. Financial doom and gloom is spreading.
Lenders gave subprime mortgages to people with bad credit, who could only qualify for mortgages with high credit rates. The flow on effect has been to those borrowers with good credit ratings and secure incomes who qualified for home loans with lower interest rates. The problem with the loans that went to the good credit risks were their assets and income did not have to be documented and their loans had variable interest rates. When these rates readjusted to higher interest rates, people just did not have the extra money to meet the higher payments.
Subprime Mortgage Fallout is felt across the World
It was an incredibly profitable time for all – well, there was the illusion of profitability. Houses were selling quickly at higher and higher prices. People that were never before able to get a mortgage bought houses for the first time. The great American dream to own your own home came true for many but it was all just an illusion. An elaborate plan for some greedy organizations to make a lot of money from people just trying to buy a home. They lent money to just about anyone – never mind whether they could pay it back or not. Read the rest of this entry »