Government Vs. Subprime Mortgage Essay

1485 words - 6 pages

Abstract
In history in 1929, there was a Great Depression where the stock market had crash. Wall Street has lost millions of investors it cause for unemployment, layoffs, and there were number foreclosure. Millions American were out of work. It nearly 10 years for America to regain from Depression after World War II brought jobs with industry regain recover. In 2007, there were loans were introduce it was part of economic factor. It had been 70 years since the last depression until the Second Depression (The Great Recession) hit for America in 2007 from a mortgage loan called subprime. The following will explain the background of the subprime loans. How the government had to intervene ...view middle of the document...

(Grith, John 2008) Basically, these private mortgages that taking over loan it caused a debt of securities. Therefore, if effected on the whole economy turmoil of foreclosure meltdown. I cause the Second Depression America had to face same as first Depression in 1929. The government had to intervene by monitoring Fannie and Freddie, had to come with a plan to get American out a recession due to the result the subprime loans effecting the banks. There were
The subprime loans was a case where the government had to find way to get bank to American out of this meltdown of securities and foreclosure boom. The government had made a strong decision to approach the crisis by doing a bailout. President Bush Thursday to freeze interest rates on some subprime mortgage loans will do nothing to stave off foreclosure, and the administration plan, mortgage lenders will voluntarily freeze interest rates for a minority of subprime adjustable-rate borrowers for five years at the entry level—already several percentage points above the interest rates for conventional home loans. (Grey, B 2007) It became a controversial when he blamed the citizens for being a irresponsible with their loan. Majority did not have the trust of the government, later President decided to place program called Relief Program where is help bankers versus the homeowners. President was targeting the source towards banks. Since majority of the problem were coming from the banks. Obama had brought in the HAMP program Home Modification Program to help modify loans to help people who were on the verge of foreclosure. Unfortunately, the program helped lower the interest it did not get them out of the foreclosure. Much of blame was on the government not pay attention to polices in housing market. When Fannie and Freddie was their portion to smaller finance. These did know how handle high interest with people who do not make good income living.
During the foreclosure meltdown at the time I was working for JPMorgan Chase for bankruptcy and foreclosure department. I assisted customer with their subprime mortgage accounts. I would constantly had to explain the way the high interest rate work on their loans. JPMorgan Chase use give us these to script lines to tell customer regarding their accounts. It got to point where we did not know how these interest was getting higher when making payments. I was appalled watching the way these fix rate loans would get higher. Some accounts had a contracts if payment were default the bank liquidate you checking and saving account. Sometimes hard that person to maintain their account. Also, people did not qualify or did not have the correct paperwork it automatically deters their qualification. Currently, they brought Sub-Prime loan back had been going on 3 years. In my opinion, the government needs to have a department to evaluate these subprime loans. It should when they wanted a trillion dollars to bring mortgage...

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