1 of the big contributors to the 2007/2008 crash was the over leverage of loans. People who couldn’t afford a home loan was given a loan and investors packaged up these bad loans into packages that they sold all over the world. I know people that had 5 homes being built for them in 2007 because they were going to flip them when finished. When people couldn’t repay their loans because of layoffs or cutbacks from employers and homes started sitting and not selling, people lost all of their down payments and all those investments of junk loans were worthless, financial institutions lost money.
When they loosened up the requirements for home loans and financial institutions knew certain people would have a hard time repaying the loan even if something minor would happen, we were doomed. If you can’t afford a home, you shouldn’t be able to buy 1
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