Lending Money For A Home - 1151 Words

Before 2007 borrowing money for a home used to be extremely easy because loans were very easy to obtain from banks regardless of debt. Housing prices continued to increase because money was quickly accessible from banks. Too much money was too readily available. Every part of this financial lending fiasco culminated to a jarring decline from 2007-2008. At that time America suffered a financial crisis that some economists parallel to the Great Depression. Banks were unable to loan, the Stock Market crashed, and many Americans lost their jobs. At that point there was nothing left to do except recover. During this downward spiral many Americans lost their homes due to foreclosure or bankruptcy stemming from an inability to pay their mortgage. I really believe that people don’t know what they have until it is gone, and for many people they lost heavily in 2007. The lack of regulation allowed people to take excessive risks with high yield without thinking much for the consequences. An opportunity has presented itself to those opportunistic buyers who can look at the silver lining in any situation. That opportunity comes in the form of buying foreclosed homes. A popular trend is to become a boomerang buyer and to save for the financing on a new home after losing a home due to a short sale, foreclosure, or bankruptcy (Leopard, Hal 2015). Previously home owners were required by the government to hold off seven years after a short sale or foreclosure on a home but there areShow MoreRelatedThe Great Recession Of 20081388 Words   |  6 Pagescrisis in American history, behind the Great Depression. The Recession of 2008 was caused by two major faults: the use of subprime lending and changes in banking culture leaning towards self interest within the banking industry. There is no doubt that subprime lending was a major cause of the Recession. It was a tactic used by investment banks in order to get more money from unsuspecting homeowners. However, lenders found out that most of the people who were qualified to have a mortgage already hadRead MoreThe 2008 Housing Crisis: A Brief Overview of Causes Essay examples1653 Words   |  7 Pages(businessdictionary.com 2014). When the bubble bursts, the result is a quick decline in home prices (businessdictionary.com 2014). In the U.S., a housing bubble began to emerge just after the turn of the 21st century. In these years, the economy was in great shape, interest rates were low, and consumers were ready to buy, which drove up real estate prices very quickly (Trehan 2007). Houses were viewed as an excellent investment by home buyers and lenders alike. However, the bubble eventually burst, and housingRead MoreThe Problem Of The Foreclosure Crisis1663 Words   |  7 Pagesinevitable foreclosure. Current lending practices make it difficult for potential borrowers with tarnished credit histories (like foreclosure) to qualify for a loan. Since traditional sources of home financing are unavailable to so many people, alternatives have begun to flourish in the economy to meet the demand of people wishing to purchase homes with less-than-perfect credit histories. The primary options boomerang buyers have at their disposals to obtain home ownership again are: lease-to-ownRead MoreKey Factors Affecting The Forec losure Crisis1286 Words   |  6 Pagesthe late 1990’s and accelerating into the early and mid-2000’s, mortgage lending became easier. And it became easier for everyone involved: the borrower, the lender, the guarantor and the investor. The rise of the risk-free, no-down payment, low-documentation loan was not only born, but metastasized beyond imagination. Traditionally, the biggest hurdle to home ownership was the down payment. Ever since banks began lending, from the secondary market innovations of the depression era 1930’s andRead MorePredatory Lending and Inequality Essay1281 Words   |  6 PagesConstance M. Ruzich and A. J. Grant, authors of â€Å"Predatory Lending and the Devouring of the American Dream,† argue that the downfall of the American dream has occurred because of predatory lending acts. According to the authors, predatory lending and inequality play a very significant role in the corruption of the American dream. Predatory lending has caused many conflicts in the American society. Victims who fall for predatory lending are usually low income homeowners or those having financialRead MorePayday Lending Is A Convenient, Instant, And Short Term Option Essay1647 Words   |  7 Pagesor herself in some sort of financial misfortune. In such instances, payday lending can be a convenient, instant, and short-term option one may want to consider. The speed, ease, and convenience associated with payday lending enables an individual to get out of trouble quick, which has resulted in payday lending consistently growing in popularity over the last couple of decades. Since the early to mid 1990s, the payday lending industry has continuously grown in popularity as well as quantity. In factRead MoreCurrent Issues Project On Peer Lending1643 Words   |  7 PagesPeer-to-peer Lending Advancements in technology coupled with new legislation have brought upon a game changer in the financial industry known as peer-to-peer to lending. Originally established as a way to help boost the economy in developing countries, peer-to-peer lending is expanding its capabilities into first world countries through online platforms. This new industry is experiencing tremendous growth, with pwc estimating that it could be a $150 billion business by 2025 (Karabell). The Lending ClubRead MoreCredit Crunch And Its Effects On The Economy1451 Words   |  6 Pagesfunds for lending, leading to a resulting decline in loans available (Pettingger, 2011). Credit crunch was one of the ‘cruel’ outcomes from the 2007 subprime crisis in the United States, when most of subprime borrowers defaulted and many commercial and investment banks in the United States have gone bankrupted as they failed to receive the loan from the borrowers. This led to the the credit crunch due to the limi ted amount of money that banks are willing to take on loan and the freeze in money marketRead MoreThe Sub-Prime Mortgage Crisis of 2008900 Words   |  4 PagesDepression. It was the actions of individuals and companies that caused this crisis. For although it could have been adverted, too much money was being made by too many people in place of authority to think deeply on the situation. As such, by the time actions were taken to attempt to rectify the situation, it was already too late. Trillions of dollar of tax payers’ money was spent trying to repair the situation that was caused by the breakdown of ethics and accountability in the private sector. And despiteRead MoreEssay On Regulating American Banks1033 Words   |  5 Pagesideally points that excessive regulation has affected the lending by financial institutions, thereby constraining the American economic growth. It is pinpointed that the lending has risen by only 25 percent since the 2007-08 financial crisis. This figure as noted is actually far less when compared to other recent recoveries. Additionally, over this period America has experienced a sluggish Gross Domestic Product growth. The red tape has choked lending, particularly essential mortgages in which a decade