The Global Recession Essay Example | Topics and Well Written Essays - 2750 words

The Global Recession - Essay ExampleThe demand for homes and mortgages continued to profit everyplace the years as buyers became more than confident in their buying decisions and the return on their investments thus creating a form of bubble that resulted in a continuing rise in home prices. To further bear the borrowing by home buyers loan terms were further relaxed as plenty of funds were in stock(predicate) with the lenders and agencies causing a wide dispersion of credit facility without properly checks and balances (Jaffee 2008).Property agents were assigned the job of bringing potential home buyers to the agency in return for the additional benefits and incentives. At that time, the only pose of the financial institutions was to give loan to as many people as possible to earn more and benefit from the soaring prices of properties. But what they ignored in their greed was to check the repaying competency of their potential customers in order to avoid the future debacle. T he financial prudence was ignored and people with low income or big credit history were facilitated by the lenders. Favorable loan conditions were offered as a way to attract borrowers by lending companies that in fact led to solvency issues for them. Loans offered at variable low rates were expected to increase in the future and many borrowers took mortgages in their anticipation that the high prices will help them to refinance fleetly at more encouraging provisos (Jaffee 2008). However, this did not happen and conditions really worsened over a item of time.