Welcome

Anti Essays offers essay examples to help students with their essay writing.

Sign Up

Subprime Mortage Crisis Essay

Open Document

Below is an essay on "Subprime Mortage Crisis" from Anti Essays, your source for research papers, essays, and term paper examples.

The subprime mortgage crisis is an ongoing financial crisis characterized by contracted liquidity in global credit markets and banking systems triggered by the failure of mortgage companies, investment firms and government sponsored enterprises which had invested in subprime mortgages. The crisis, which has roots in the closing years of the 20th century but has become more apparent throughout 2007 and 2008, has passed through various stages exposing pervasive weaknesses in the global financial system and regulatory framework.
  The crisis began with the bursting of the United States housing bubble and high default rates on "subprime" and adjustable rate mortgages (ARM), beginning in approximately 2005–2006. For a number of years prior to that, declining lending standards, an increase in loan incentives such as easy initial terms, and a long-term trend of rising housing prices had encouraged borrowers to assume difficult mortgages in the belief they would be able to quickly refinance at more favorable terms. However, once interest rates began to rise and housing prices started to drop moderately in 2006–2007 in many parts of the U.S., refinancing became more difficult. Defaults and foreclosure activity increased dramatically as easy initial terms expired, home prices failed to go up as anticipated, and ARM interest rates reset higher. Foreclosures accelerated in the United States in late 2006 and triggered a global financial crisis through 2007 and 2008. During 2007, nearly 1.3 million U.S. housing properties were subject to foreclosure activity, up 79% from 2006.
  Major banks and other financial institutions around the world have reported losses of approximately US$435 billion as of 17 July 2008. The liquidity concerns drove central banks around the world to take action to provide funds to member banks to encourage lending to worthy borrowers and to restore faith in the commercial paper markets. The U.S. government also bailed out key financial institutions,...

Show More


Citations

MLA Citation

"Subprime Mortage Crisis". Anti Essays. 18 Dec. 2018

<https://www.antiessays.com/free-essays/Subprime-Mortage-Crisis-146790.html>

APA Citation

Subprime Mortage Crisis. Anti Essays. Retrieved December 18, 2018, from the World Wide Web: https://www.antiessays.com/free-essays/Subprime-Mortage-Crisis-146790.html