Realtors began encouraging borrowers to misrepresent their financial information as well as the value of their intended property acquisitions, further inflating the so-called "housing bubble." More importantly, the inflated values were largely illusory rather than reflective of actual property values after diligent appraisal.
In addition to borrowers hoping to make a quick profit, many thousands of ordinary middle class Americans began to take advantage of the lapses that developed in the mortgage lending industry, not uncommonly with encouragement from realtors and lenders who deliberately failed to disclose the meaning of variable interest rates.
Eventually, the housing bubble burst when the supply of so many new housing developments outpaced demand for housing. As a result, home values dropped, leaving many thousands of homeowners with mortgage obligations that far exceeded the value of their property.
Many of them began defaulting once their variable mortgage interest rates increased on homes that were completely out of their responsible price range in the first place. Because those defaults devalued the complex mortgage securities whose value and security depended on the continued solvency of the initial borrowers and of their lending institutions, the many investments supposedly guaranteed by those mortgage securities, including those incorporated into pension funds that provide a fixed income for millions of retired American workers), were threatened directly by increasing home mortgage defaults.
Conclusion:
The current economic crisis in the U.S. is attributable to multiple factors, most of which could never have generated such damage without their combined effects and the extent to which each provided the opportunity for the others to undermine the real estate market, followed shortly...
Another significant factor that affected the financial crisis of 2008 was role that Wall Street played in worsening the impact of the financial disaster that was to come. Specifically, a number of prominent Wall Street companies effectively "bought in" to the housing shortage by investing in securities that are financially supported by loans of a dubious nature. A recent report compiled by the Financial Crisis Inquiry Commission alludes to the
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