From the Report

The collapse of the U.S. housing market, the world’s largest debt market, is the defining economic event of our lifetimes.

This presentation explores what happened and why, where we are today, and what the future likely holds.

What Happened?

For the Second Half of the 20thCentury, Housing Was a Stable Investment

…And Then Housing Prices Exploded

Prices Exploded Because the Borrowing Power of a Typical Home Purchaser More Than Tripled from 2000-2006

Americans Have Borrowed Heavily Against Their Homes Such That the Percentage of Equity Has Fallen Below 50% for the First Time

Housing Became Unaffordable in Many Areas Using a Typical 30-Year Fixed-Rate Mortgage, Which Led Many Borrowers to Take Exotic Mortgages

There Was a Dramatic Decline in Mortgage Lending Standards from 2001 through 2006

Why Did It Happen?

Among the Many Causes of The Great Housing Bubble, Two Stand Out

The lenders making crazy loans didn’t care if the homeowner ended up defaulting

The entire system –real estate agents, appraisers, mortgage lenders, banks, Wall St. firms and rating agencies –became corrupted by the vast amounts of quick money to be made

The Enormous Amounts of Money to Be Made Corrupted Our Financial System

Deregulation of the Financial Sector Led to a Surge of Compensation, Leverage and Profits

Wall Street Firms Were Making a Fortune Securitizing Loans

Mortgages Were Pooled into RMBSs, Tranches of Which Were Pooled into CDOs

The Rating Agencies Were Making a Fortune Rating Structured Finance Products

Two Waves of Losses Are Behind Us… But Three Are Looming…

See the report below…


Fascinating Report on the Housing and Economic Crisis and Why There Is More Pain to Come
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