The Housing Crisis Of 2008

1630 Words7 Pages
For decades Americans couldn’t help but rejoice when they were able to own their very own home. The image of holding the keys and to quickly step foot into their home provided Americans with visons of prosperity. Many Americans whether poor, middle-class, or wealthy could now dream of endless possibilities when owning their very own home, as well as embracing a sense of accomplishment. These accomplishments or feelings were great at first; however, the realty for some Americans was that behind the glitz and glamor was a ticking time bomb. Now imagine the United States of America flourishing in the real estate sector and the US economy from Wall Street to individuals benefiting from the booming housing market. However, while all this was…show more content…
It is necessary to first explain what Thomas Sowell an economics scholar says “The cast of characters” (Sowell 2). The nature of the housing market makeup is much more than just a bank issuing loans. The importance is to understand what lies behind the scene and from there comprehend the causes of the housing crisis. The Federal Reserve System in general regulates banks across the county. The Federal Reserve also has power to “take action which affect interest rates and the money supply” (Sowell 2). The Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation are “two government-created, but privately owned, profit-making enterprises that buy mortgages from banks” (Sowell 3). The Federal National Mortgage Association is also known as Fannie Mae, and the Federal Home Loan Mortgage Corporation is also known as Freddie Mac. These Associations as stated above buy loans from banks, which ultimately eliminates the banks wait for 30 years of monthly payments. According to book The Housing Boom and Bust “Fannie Mae and Freddie Mac purchased more than one-third of all the mortgages in the nation that were resold by the original lenders.” The U.S. Department of Housing and Urban Development is another major entity in the real estate housing market. The U.S. Department of Housing and Urban Development is also known as (HUD) and “exercises authority over Fannie Mae and Freddie Mac,
Get Access