FNMA – This is the first installment in a 3 part series where we are going to delve into some of the causes and effects which led to the great mortgage meltdown and the resulting real estate recession. We have broken down the 3 parts in this series into yesterday, today and tomorrow. Basically where we’ve been, where we are and where we might be going.
In this first installment we are going to look into what caused the Mortgage Market Meltdown. FNMA
In the years from 1997 to 2006 the price of the average American house increased by over 124%. This rise in the value of people’s homes led to the highest increase in net worth of American households over an equivalent time period in American history. The equity in people’s homes quickly became their major net worth component. During this time many homeowners made the decision to refinance their homes and pull cash out by increasing the balance of their mortgages. They used the money obtained from their homes for just about any purpose. Lifestyle spending was the predominant use of the money from their homes.
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