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Certainly shows a few (three) flaws in the process. And why did this happen?
This link has been bookmarked by 60 people . It was first bookmarked on 18 Dec 2007, by Bill H.
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23 Apr 10
simin lewThe US sub-prime mortgage crisis has wide-ranging effects on the housing market, the economy and the financial sector.
Sub-prime mortgage is actually caused by a bubble burst in the credit creation in terms of the loans generated by USA. Which leans to a financial debit/deficit in the banks of USA.. Hence one example is Lehman brothers which fell into a state of bankruptcy ! -
04 Apr 10
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- Credit crunch
- UK Downturn
- US sub-prime
- Northern Rock
Page last updated at 08:07 GMT, Wednesday, 21 November 2007The downturn in facts and figures
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<!-- S BO -->The US sub-prime mortgage crisis has led to plunging property prices, a slowdown in the US economy, and billions in losses by banks. It stems from a fundamental change in the way mortgages are funded. -
THE CRISIS GOES NATIONWIDE
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Sub-prime lending had spread from inner-city areas right across America by 2005.
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The wave of repossessions is having a dramatic effect on house prices, reversing the housing boom of the last few years and causing the first national decline in house prices since the 1930s.
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The property crash is also affecting the broader economy, with the building industry expected to cut its output by half, with the loss of between one and two million jobs.
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building industry makes up 15% of the US economy, but a slowdown in the property market also hits many other industries
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REDIT CRUNCH
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economic slowdown could get worse is that banks and other lenders are cutting back on how much credit they will make available.
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mortgage market has been particularly badly affected,
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banking industry is facing huge losses as a result of the sub-prime crisis.
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banks have announced $60bn worth of losses
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BOND MARKET COLLAPSE
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suffering huge losses are the bondholders, such as pension funds, who bought sub-prime mortgage bonds.
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t is estimated that ultimately losses suffered by financial institutions could be between $220bn and $450bn, as the $1 trillion in sub-prime mortgage bonds is revalued. <!-- E BO -->
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Andrea OdleThe US sub-prime mortgage crisis has wide-ranging effects on the housing market, the economy and the financial sector.
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22 Jan 08
Heidi MorrisSeveral sets of data explore mortgages and the housing market.
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Robert DumasWe have to get the BBC to show us how and why our own housing market is collapsing.
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18 Dec 07
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THE NEW MODEL OF MORTGAGE LENDING<form>How it went wrong</form>
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Add Sticky Note
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In recent years, banks have moved to a new model where they sell on the mortgages to the bond markets.
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But it has also led to abuses as banks no longer have the incentive to check carefully the mortgages they issue.
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Add Sticky Notesub-prime lending to borrowers with poor credit histories and weak documentation of income, who were shunned by the "prime" lenders like Freddie Mac.
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Weak documentation of income?
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They also included "jumbo" mortgages for properties over Freddie Mac's $417,000 (£202,000) mortgage limit
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Add Sticky Note
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Sub prime lending areas
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They told them that they could get cash by refinancing their homes, but often neglected to properly explain that the new sub-prime mortgages would "reset" after 2 years at double the interest rate.
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By late 2007, one in ten homes in Cleveland had been repossessed and Deutsche Bank Trust, acting on behalf of bondholders, was the largest property owner in the city
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And it is likely that as many as two million families will be evicted from their homes as their cases make their way through the courts.
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glut of four million unsold homes
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banks have announced $60bn worth of losses
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Also suffering huge losses are the bondholders, such as pension funds, who bought sub-prime mortgage bonds.
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It is estimated that ultimately losses suffered by financial institutions could be between $220bn and $450bn, as the $1 trillion in sub-prime mortgage bonds is revalued.
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17 Dec 07
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26 Nov 07
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The US sub-prime mortgage crisis has lead to plunging property prices, a slowdown in the US economy, and billions in losses by banks. It stems from a fundamental change in the way mortgages are funded.
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25 Nov 07
Dante-Gabryell MonsonThe US sub-prime mortgage crisis has lead to plunging property prices, a slowdown in the US economy, and billions in losses by banks. It stems from a fundamental change in the way mortgages are funded.
Public Stiky Notes
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