Running Header: Housing collapse
1. Why did housing prices rise rapidly during 2002-2005?
Prices when it comes to housing rise every now and then, but between the years 20022005, eyebrows were raised due to the rapid rise of housing prices. The Unite states were
considered “greener”, many people from all over the world migrated into the country.
Coincidentally, banks had just made it possible for people to get mortgages through credit which
made it easier for them to buy houses and settle faster than before. Contractors were under
pressure in building houses to cope with the high demand from the immigrants. The policy of the
Fedslow interest of 2002- 2005 and the lowdown payment, brought about rapids growth of ARM
loans. This was thought to be a positive thing all around the country, but the long term effects
proved vital to the country’s economy.
2. Why did the mortgage default rate increase so sharply during 2006 and 2007 even before the
2008-2009 recession began?
The uncontrolled purchase of mortgages during the years 2006-2007 lead to the spiking
default rates. The (Nwogugu 2011) funding was the one involved at that time. They id
uncalculated buying leading to strains, this happened before the recession in 2008-2009. The
loans that were ones favorable to the people in 2004 turned into very high monthly payments
which were hard to adapt due to the increased subprime shares that had rated upwards by default.
B y half of 2006, foreclosure rates of mortgages was generated and house falling prices soaring
by default. This created confusion in. lending and housing in many different sectors all across the
3. What did the Community Reinvestment Act have to do with the housing bubble and collapse?
In 80 years, the collapse of the housing bubble and the role of Reinvestment community
act in 2007, has made a record of being the worst financial year yet. Many theories have been
brought forward yet none has held up longer enough to be taken prove that the Reinvestment
community act of 1977 was involved. It Is said that in the hope of meeting banks credit needs
which is that of low income pledgers, lending institutions were forced by the law to take high
risk loans that proved a major strain or even impossible. The nature of this loans which was low
loans quality led to the collapse of the housing bubble. The appropriate supervisory agencies said
that the lending needs and credit be fully filled by the banks in all places they were
commissioned. It further states that appropriate steps be taken in operational practices. When
applying new chatters expansion defiance would be accounted for. The Law fails to evaluate any
institution’s performance making the local banks markets meant to be considered before CRA
was enforced leading to the collapse of the Housing Bubble policy.
Dippelsman, R. (1989). Housing prices. Canberra: Dept. of the Parliamentary Library.
Titman, S., Wang, K., Yang, J., & National Bureau of Economic Research,. (2014). The
dynamics of housing prices.
Glaeser, E. L., Gyourko, J. E., Saks, R. E., & National Bureau of Economic Research.
(2005). Why have housing prices gone up?. Cambridge, Mass: National Bureau of Economic
United States.,& United States. (2009). The housing bubble and its implications for the economy:
Hearing before the Subcommittee on Housing and Transportation and the Subcommittee on
Economic Policy of the Committee on Banking, Housing, and Urban Affairs, United States
Senate, One Hundred Ninth Congress, second session, on the issues surrounding a housing
bubble and its possible implications for the economy, Wednesday, September 13, ...