Donald Trump Case Summary

Housing in America also had a significant impact due to 9/11 attacks. The average price for a house in America in 2001 was $156,600. The home ownership rate during the first half of the year was 67.5%; meaning that 67.5% of the population owned a house. As Miley explains, “The fed funds rate [is] the interest that banks charge each other for short-term loans [and it] influences rates on other loans, such as mortgages.” The Federal Reserve had a target federal funds rate of 6.5% for 2001. Four fed rate cuts were made after 9/11 and the fed funds rate was 1.75% in the end of 2001. Housing prices rose rapidly following the terrorist attacks. The median home price was $221,900 in the year 2006. From 2000 to 2006, housing prices escalated an annual rate at 8.26%; while in the 1990s, the annual increase in housing rate was 4.22% (Miley).

But what have we learned from the consequences of our actions? While the signs seemed to be somewhat positive - more homebuyers have been getting back into the market, spurred on by record low interest rates, I opted to interview several industry specialists who specialized in various facets of the real estate and mortgage industry: Tim Waller (of Caldwell Banker), Bill Linteris (of Century 21), Joseph Palermo (of Tri-County Realtors), Dean Scaduto (Caldwell Banker Financial Service Representative), and Jim Madonia (of East Coast Mortgage).

During the Federal Reserve meeting in April 2016, the range was left unchanged for federal funds at 0.25 percent to 0.5 percent (TRADING ECONOMICS, 2016). Labor markets experience growth confirmed by policy makers, yet economic activity was monitored as being slow (TRADING ECONOMICS, 2016). The risks associated with the financial developments of the country have ceased (TRADING ECONOMICS, 2016). The average percentage of interest rate in the U.S. averaged at 5.8. March of 1980 a record high was recorded at 20% (TRADING ECONOMICS, 2016). The lowest interest rates were recorded in the month of December 2008 at 0.25% (TRADING ECONOMICS, 2016).

Since mid 1990s, the subprime mortgage market has grown rapidly experiencing a phenomenal 23% compound annual growth rate to 2006. The total subprime loan originations increased from $65 billion in 1995 to $613 billion in 2006. The subprime sector has become a significant sub-sector of the total residential market accounting for 21% of all residential mortgage originations in 2006. Similarly, by year-end 2006, total outstanding balance of subprime loans grew to $1.2 trillion, approximately 12.6% of all outstanding mortgage debt.

Post-housing/financial crisis of 2007-2009, the housing market seems to be showing signs of improvement after great downturn. With the downturn in housing prices, many homeowners did not have enough equity to avoid taking a loss on the sale of their homes so they are sitting with home loans based off of higher-than-current mortgages. However, in November the National Association of Home Builders’ sentiment index jumped to 20, which is the highest reading in over a year. Demand for mortgages has also seemed to pick up a bit according to the Fed’s 4th quarter loan survey. Construction remains at historically low levels but has increased as of late, and the number of

During the Federal Reserve meeting in April 2016, the range was left unchanged for federal funds at 0.25 percent to 0.5 percent (TRADING ECONOMICS, 2016). Labor markets experience growth confirmed by policy makers, yet economic activity was monitored as being slow (TRADING ECONOMICS, 2016). The risks associated with the financial developments of the country have ceased (TRADING ECONOMICS, 2016). The average percentage of interest rate in the U.S. averaged at 5.8. March of 1980 a record high was recorded at 20% (TRADING ECONOMICS, 2016). The lowest interest rates were recorded in the month of December 2008 at 0.25% (TRADING ECONOMICS, 2016).

Lending institutions also saw a change. In the 1990s, the federal government desired more people to own homes in the United States and lenders were urged to make home loans more attainable for a wider consumer base (Melicher & Norton, 2014, p. 168).

Mortgage rates have been at an all time low for many years and while they've gone up a bit recently, they are still historically low. This has led to masses of homeowners scrambling to refinance their mortgages. The reason so many homeowners have waited to refinance their mortgage is because there are so many mortgage refinancing myths out there. That's why we're going to help you wade through the information and dispel those mortgage refinancing myths, which will help you make an educated decision about whether or not refinancing your home is the right decision for you and your situation. Here are the top nine mortgage refinancing myths that keep so many homeowners from taking advantage of these historically low interest rates.

Morneau highlighted during his press conference that more and more middle-class families are taking on high levels of debt in a rush to buy. But by implementing these new regulations, the mortgage qualification process will become more robust and it will be easier to determine whether the borrower has the capability to make payments even if interest rates go up or if their income goes down.

• Credit underwriting: Evaluating underwriting practices on new or renewed loans for easing in structure and terms. Reviews will focus on new products, areas of highest growth, or portfolios that represent concentrations. Examiners will continue to assess banks’ efforts to mitigate risk for home equity lines of credit approaching end-of-draw

One of the first indications of the late 2000 financial crisis that led to downward spiral known as the “Recession” was the subprime mortgages; known as the “mortgage mess”. A few years earlier the substantial boom of the housing market led to the uprising of mortgage loans. Because interest rates were low, investors took advantage of the low rates to buy homes that they could in return ‘flip’ (reselling) and homeowners bought homes that they typically wouldn’t have been able to afford. High interest rates usually keep people from borrowing money because it limits the amount available to use for an investment. But the creation of the subprime mortgage

Interest rates have a major economic impact on the real estate market. Interest rates directly affect property sales. Residential property realizes the greatest affect as interest rates have a considerable influence on a homebuyer’s capability to purchase a new property. The customer is affected when there are significant increases or decreases in interest rates. Declining interest rates lower the costs of obtaining a mortgage; this in turn creates higher demand for homes, and pushes home prices up. Conversely, high interest rates increase the costs to obtain a mortgage; these increases lower the demand for homes, which creates a decline in home prices. (Stammers, 2016)

Declining price attract people with the easy loan facilities of their banks. And banks are ready with very high risk loans. This excess supply of home inventory placed significant downward pressure on prices. As prices declined, more homeowners were at risk of default and foreclosure. According to the S&P/Case-Shiller price index, by November 2007, average U.S. housing prices had fallen approximately 8% from their Q2 2006 peak and by May 2008 they had fallen 18.4%. The price decline in December 2007 versus the year-ago period was 10.4% and for May 2008 it was 15.8%. Housing prices are expected to continue declining until this inventory of surplus homes (excess supply) is reduced to more typical levels.

An increase in loan packaging, marketing and incentives encouraged borrowers to undertake difficult mortgages so they believed that they would be able to refinance quickly at more favourable terms. People borrowed money to buy the house and then expected the price to rise and sold so that they could pay off the debt which owed to the bank and demanded a new loan to buy another house. However, once the interest rate began to rise and house’s price dropped in 2007, refinancing became more difficult and banks could not collect their mortgages.

lines of credit, has dropped drastically as house prices have declined. Moreover, banks lending to