People often say that as a result of the crash millions of people lost their homes before they could pay their mortgage off. However, it also seems that the housing crash was directly a result of millions of people defaulting on their mortgage payments. Are both true? Is it just a roundabout way of saying that irresponsible bankers offered mortgages to clients when they should have known they would default? Does this claim have anything to do with changing interest rates, unemployment or the depreciation of housing prices?
In: Economics
People were buying houses they really couldn’t afford and due to things like stated income and negative am loans, they were able to. Many would refi every two years or so and due to home values rising, were able to take cash out and get into another questionable loan.
When home values started to flatten and then drop, people could no longer get cash out and since they were upside down, they were forced to pay those ballon mortgages and such.
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