The Economic Downturn Of 2008

1127 Words5 Pages
The economic downturn of 2008 had a severe and lasting effect on the American economy that persists to this day. The housing market was the primary cause of the recession because people had overextended themselves to what they really could afford. Many people are to blame for this including bankers, Wall Street, the government and the consumer who bought the homes. There are many areas of the housing market that can be changed to try and ensure that history does not repeat itself but in reality, it could conceivably happen again in some form because what happened is human nature. Back in the 1970’s, it was a long and tedious process to get a home loan. It took several weeks or even months after applying for a home loan…show more content…
This is what actually caused the foreclosure crises of 2008. People, who in years past would never have been able to obtain a loan were now able to get one and rather easily. People who want to buy a home should be able to show proof of income or the ability to pay the loan back. Also, people should be required to put a down payment on their home. Just having these two requirements in place would have averted the crises back in 2008. Another factor in the foreclosure crises is the fact that Wall Street got involved with the housing market and became a source of capital after Fannie Mae and Freddie Mac were pushed to the side due to infractions. Investment banks were repackaging loans and selling them off to unsuspecting buyers. Home owners were only paying a small amount for the first couple of years and then were hit with a much bigger payment all at once that they were not able to pay. Because home prices had gone up significantly in a short amount of time people thought that this was going to continue indefinitely. Having these kinds of loans available is another part of the problem. These loans should have never been made available to homeowners. The loan officers are not going to tell the homeowner this is a bad way of taking out a home loan because they only see their commission and nothing else. So it would have been best if these types of loans had never
Open Document