An Lesson Learned From The Real Estate Collapse

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One major lesson learned from the real estate collapse in 2008 – 2009 was that greed. Although not a financial concept that is not necessarily considered negative, greed can bring an economy to its knees, especially if the greedy suddenly become the needy. Investment bankers as well as banks were facing a relaxed lending period and were willing to sell property or make loans to purchase property to those who may or may not have been able to afford it. But the lending institutions and the investment bankers at that time saw this as an opportunity to make money in a couple of ways. The first way that the lenders and bankers saw an opportunity to make money at the expense of those who could not afford it in the first place, was to levy large handling fees for lending in addition to larger than normal interest rates. This presented the borrower with more problems on top of the already too expensive house they were buying. The greedy lenders took advantage of the poor credit borrowers but with the expectation that they could not pay. This leads us to the second way that the greedy preyed on the needy using real estate as bait. Lenders expected that borrowers would eventually fall on hard times and would not be able to pay the mortgage on the property they had purchased. This allowed the lender to swoop in and seize the property at a lower rate than the borrower paid for the property. The lender could then re-sell the property to another “prospect”. Instead of passing on

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