Macecon

First Slide

Dubbed as the Great Recession it began in December 2007 and technically ended in June of 2009. We are approaching the end of the second quarter of 2013 and continuing to see results that we bouncing back. The Great Recession is also known as the Global Crisis of 2009 because of its effects on the entire world economy with greater damage to some countries than others. Leading up to the Great Recession, interest were low, unemployment was low and people felt that were financially confident.

Second Slide

One of the major components of the Crisis was the Bust of the Housing bubble . Under President Clinton Community Reinvestment Act rules were tightened, and under President Bush CRA's loan commitments go through the roof. Unfortunately this sets us up for the fall... The powers that be gets this big great idea to connect investors to homeowners through mortgages. At first it seems to be legit, lenders are qualifying families that can afford a mortgage, then greed steps into place and the investors push the lenders to find them more!

So what do you do when all the your qualified families already have a mortgage? You realize that once homeowners default on their mortgages, the lender gets the house, and houses are always increasing in value. Since they covered that homeowner default, lenders can start adding risk to new mortgages not requiring down payments, no proof of income, no documents at all, and that’s exactly what they did. Instead of lending to responsible homeowners called prime mortgages, they qualify families who have less than average credit , small to sometimes no down payment and low income ,sub-prime mortgages. 

These homeowners defaulted on their loans and bankers and investors could not cover their commitments. Home values plummeted, forecloses rates increased and therefore it begins.