What was the criteria for qualifying to get the mortgage

The subprime mortgage crisis, popularly known as the “mortgage mess” or “mortgage
meltdown,” came to the public’s attention when a steep rise in home foreclosures in 2006
spiraled seemingly out of control in 2007, triggering a national financial crisis that went
global within the year. Consumer spending is down, the housing market has plummeted,
foreclosure numbers continue to rise and the stock market has been shaken. The subprime
crisis and resulting foreclosure fallout has caused dissension among consumers, lenders
and legislators and spawned furious debate over the causes and possible fixes of the
“mess.”
International Monetary Fund Report
In its semiannual Global Financial Stability Report released on April 8, 2008, the
International Monetary Fund (IMF) said that falling U.S. housing prices and rising
delinquencies on the residential mortgage market could lead to losses of $565 billion
dollars. When combining these factors with losses from other categories of loans
originated and securities issued in the United States related to commercial real estate,
IMF puts potential losses at about $945 billion.
This was the first time that IMF has made an official estimate of the global losses
suffered by banks and other financial institutions in the U.S. credit crunch that began in
2007 amid the rising number of defaults on subprime home loans.
The incredible $945 billion estimate of losses, made in March, represents approximately
$142 per person worldwide and 4 percent of the $23.21-trillion credit market. IMF noted
in its report that global banks likely will carry about half of these losses. The report
cautioned that the loss estimates are just that, estimates, and the actual numbers may be
even higher.
In March, Standard & Poor’s had predicted that global banking firms would write off
approximately $285 billion dollars in various securities linked to U.S. subprime real
estate, with more than half the losses already recognized. Some analysts have put the
figure higher for the subprime market and related losses.
The IMF, whose stated core mission is to promote global financial stability, said there
was “a collective failure to appreciate the extent of leverage taken on by a wide range of
institutions—banks, monoline insurers, government-sponsored entities, hedge funds—
and the associated risks of a disorderly unwinding.”
“It is now clear that the current turmoil is more than simply a liquidity event, reflecting
deep-seated balance sheet fragilities and weak capital bases, which means its effects are
likely to be broader, deeper, and more protracted,” the report said.

Most main-stream economists agree that the 2006-2008 Recession was caused by the subprime loan mortgage market. Using the internet search engines, prepare a group project presentation addressing the following items:

  1. Define the subprime loan market
  2. What role did the government play in developing this market
  3. Most main-stream economists agree that the 2006-2008 Recession was caused by the subprime loan mortgage market. Using the internet search engines, prepare a group project presentation addressing the following items:

    1. Define the subprime loan market
    2. What role did the government play in developing this market
    3. What was the criteria for qualifying to get the mortgage

Order the answer to view it

Essay Solutions


Essay Solutions