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
It was part irresponsible spending (taking a mortgage with balloon payments that they knew they couldn’t afford) and predatory lending practices by offering mortgages that the bank knew would default. It didn’t matter to the original bank because they sold it right after they made the loan, but someone eventually gets caught with the bill.
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