The Subprime Mortgage Crisis and What to Do about It
A Review of the Literature The fuse for the subprime financial shock was set early in this decade, following the tech-stock bust, September 11th, and the invasions of Afghanistan and Iraq. The subprime mortgage crisis is a historic turning point in our economy and our culture. The disruption in our credit markets is already of historic proportions and will have important economic impacts. More importantly, this crisis has set in motion fundamental societal changes – changes that affect our consumer habits, our values, our confidence to the future, and our psychological status. After this financial crisis, our economic went downturns and worsen now. When we talk about or hear about the subprime mortgage crisis, to fully understand the crisis help us to avoid the crisis happening again in the future. This literature review considers different opinions of the subprime mortgage crisis by responding to the following questions:
1. What are subprime mortgages?
2. How did the subprime mortgage crisis happen?
3. What are the causes of the subprime mortgage crisis?
4. Was the subprime mortgage crisis in the U.S. totally unexpected?
5. What to do to avoid it happening again in the future?
By answering these questions, we can have understandings of the subprime mortgage crisis and find out the solutions to the crisis. When Americans taking advantage of the easy credit conditions, we take for granted the problems behind the credit system. The consequences of the crisis affect everyone that is why we need to look back and learn the lessons from the subprime mortgage crisis.
What are subprime mortgages? Before we come to subprime mortgages, let us figure out what do we mean by “subprime”. Subprime is the opposite to prime. Private sources of mortgage credit overtook government sources at the start of this decade and