Current subprime mortgage situation

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In fact these subprime advances are usually prevalent with risky conditions such as punishments for paying off the advance early that result to expensive refinancing the advance , payments based only on interests and low certification prerequisites that translate to borrowers requiring little official procedure to authenticate some issues this processes leads to what is termed as liar advances (Chris , 2007 Research indicates that the lending market in the United States have greatly increased for the past few years , this market include the Subprime lending market which is said to be offering a number of residential mortgages to the members of the society , in this case we find that the subprime lending has been focusing on particular members of the society who are facing credit risks since they are profound to be excessively put under undue financial burdens

These mortgage lenders are said to have been working on the improvement of the effectiveness and fair play of the mortgage markets since this market deals with enabling the households who are in need of building wealth , stabilize and to meet all the risks that individuals face on their credits On of the methods normally used in the implementation of the care to the house holds is securitization which is found to have been used greatly in the United States since it was implemented in the last thirty years Many economists are putting into consideration whether this housing slump will bring the economy to the point of failure

Paper Topic: Current subprime mortgage situation Subprime Mortgage Situation Subprime is defined as some credit which does not meet up major guiding principles that is put in place by financial institutions and particularly those dealing with mortgages

This transaction of the lending market has led to the upsetting of the consumers ‘ expectations and attitudes towards the purchasing of the houses which leads to the worry of the future increase in house prices (Olsen , 1969 We therefore find that the housing industry have been facing negative collision in the balancing of business growth in united states which has caused a drop in the housing industry , this occurs as a result of , over building , high building prices and less credit availability that is present in many lenders

Reports indicate that in the year 2006 subprime advances increased from nine percent to approximately twenty percent overall in the housing market

The immense growth in subprime lending is imminently seen in advancing finances to borrowers with meager credit

The Subprime situation have caused a negative effect on wealth in many countries due to the rise in prices of the homes which makes the consumers restrain from their spending believing that they are not well off and unable to

The changing market conditions make it difficult for the consumers to rely on the present comparison between the prices of the houses thus giving the current situation the potential to mess with property appraisals

This subprime loans stand relatively high rates of interest to recompense for risk inherent faced by borrowers predominantly those in the mortgage industry

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