The Global Financial Crisis and its Repercussions
Ms. Lina Tannir
May 8th, 2009
Ahmad Issa * Sara Al Mughrabi * Sara Itawi * Reine Fakih
The grow of the Problem
We can define the current subprime mortgage financial crisis as the critical reduction of liquidity in global financial institutions and worldwide banks caused directly by the failure of banks that give mortgages and investment firms and enterprises created and held by the American government activity (Fannie mae and Freddy mac) which had provided massively high expire loans to borrowers with high risk of default. These loans were called subprime mortgages in contrast with the more tralatitious prime mortgages. The crisiss causes started in reality in the new 90s but its direct explicit impacts were first seen in 2006. It impact and is still affecting the worlds financial brass and it opened the eyes of economists and financial agents on many dark traps and weaknesses.
Banks and institutions competing on the market of real estate lending and on the segment of normally unqualified borrowers started a trend of demoralize loans standards, combined with seemingly better loan conditions like short initial payments, loans to finance these principals, and pre-payment options. The long-term tendency of rising trapping prices and the fixed low, or even decreasing interest rate encouraged those borrowers to accept and take these mortgages thinking that they can cursorily re-leverage their loans at better terms in the near future. However, the government started raising the interest rates and real-estate prices started to fall because of the fast ontogeny construction sector. Taking a loan to cover other became very difficult taking into account the manipulative and invidious loan conditions and holders of new adjustable rates mortgages (ARMs) started to default in quantities the banks could not handle. Defaults became more common, ARM interest rates were castigate higher than...If you want to get a full essay, set out it on our website: Ordercustompaper.com
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