Financial Crisis Explained: Subprime Mortgage | Jabar Post Indonesia

Financial Crisis Explained: Subprime Mortgage | Jabar Post Indonesia/a> – This time JabarPost.Net will discuss about Mortgage.

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Financial Crisis Explained: Subprime Mortgage | Jabar Post Indonesia

A mortgage loan or, simply, mortgage (/ˈmɔːrɡɪdʒ/) is used either by purchasers of real property to raise funds to buy real estate, or alternatively by existing property owners to raise funds for any purpose, while putting a lien on the property being mortgaged. The loan is “secured” on the borrower’s property through a process known as mortgage origination. This means that a legal mechanism is put into place which allows the lender to take possession and sell the secured property (“foreclosure” or “repossession”) to pay off the loan in the event the borrower defaults on the loan or otherwise fails to abide by its terms. The word mortgage is derived from a Law French term used in Britain in the Middle Ages meaning “death pledge” and refers to the pledge ending (dying) when either the obligation is fulfilled or the property is taken through foreclosure.[1] A mortgage can also be described as “a borrower giving consideration in the form of a collateral for a benefit (loan)”.

Mortgage borrowers can be individuals mortgaging their home or they can be businesses mortgaging commercial property (for example, their own business premises, residential property let to tenants, or an investment portfolio). The lender will typically be a financial institution, such as a bank, credit union or building society, depending on the country concerned, and the loan arrangements can be made either directly or indirectly through intermediaries. Features of mortgage loans such as the size of the loan, maturity of the loan, interest rate, method of paying off the loan, and other characteristics can vary considerably. The lender’s rights over the secured property take priority over the borrower’s other creditors, which means that if the borrower becomes bankrupt or insolvent, the other creditors will only be repaid the debts owed to them from a sale of the secured property if the mortgage lender is repaid in full first.

In many jurisdictions, it is normal for home purchases to be funded by a mortgage loan. Few individuals have enough savings or liquid funds to enable them to purchase property outright. In countries where the demand for home ownership is highest, strong domestic markets for mortgages have developed. Mortgages can either be funded through the banking sector (that is, through short-term deposits) or through the capital markets through a process called “securitization”, which converts pools of mortgages into fungible bonds that can be sold to investors in small denominations.

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  1. @DullardGuy It actually was successful its just when deregulation started where all these banks started to lend to anyone then that's when the problems started. Data actually shows that about 15% of CRA approved banks lent sub prime mortgages.So anyone with logic would be able to see CRA didn't cause this crisis. Maybe your not stupid but just uninformed so hope this helps.

  2. I'm doing a 1000 word, six graphs, six citations, two sources, explaining bout the Economic Meltdown, and have to explain Federal Reserve, monetary Policy, intrest rates, ARM, Sub prime, mortgage back securities, inflation, deflation, selling and buying securities, finacial giants. ANd ur video is helping meh with the Sub prime, thank ya!

  3. I would like to second this comment. I am one year later than tophers in the exact same situation…a senior at Penn State. I learned more about the subprime mortgage crisis in 7 minutes and 44 seconds than I have all semester, or year, or longer. I'm not paying 20k a year but not far off and I want to cry now. I am going to download the This American Life podcast immediately. Thank you!

  4. This video makes out that there is an evil center figure called scrooge in the world. This is not true. The fact is that the pool of money is everyones money, and everyone wants more money. that is what caused it. Ever hear anyone say they wish they could earn less?

  5. @tophers402

    yessss I was just about to basically say the exact same thing. This video just helped me get through a good portion of studying for my final tomorrow!

  6. @johammbass
    Out fiat currencies are not backed by gold. McDuck hasn't got a pool of gold. He has a pool of worthless fiat money. The bank has a 'printing machine'. With the use of fractional reserve system, the banks printed most of the money out of thin air. They charged interest on non-existing money and diluting the value of money in circulation in the meantime.

  7. This is very funny and very good, I can get my best friend to watch it and understand. God know's me telling him didn't work. Good job man.

  8. im confused so when the person gets a mortgage, and the mortgage broker sells it to a bank, etc…. who is the payments going to? the original person you got it from or the current holder? and does the mortgage owner know this? like one day youll be paying salle mae or w.e then the next day your bill comes and it says chase bank (you got wtf?!) ???

  9. i also dont get how it goes from mortgage firm, to bank, to investment firm.. how is that making money? like if you originally bought it for 100, then sold it for 200, doesnt the person know that you are just selling it for double the price? who wants to buy that? idk i guess im just REALLY confused…

  10. @johammbass Well said. At least someone here has some sense. Whenever, the government gets involved in fixing prices of anything, they distort the market. Remove government guarantees from any transaction between two parties and even the most ignorant will use some rationality to make the decision that satisfies their interests or hire an agent who can do so. Decentralization of authority returns accountability to the locals. Washington D.C is still to problem.

  11. @bauer18

    The interest rates were high, meaning high returns for the companies. They would sell it on for a quick profit, whereas in the long run, it would be profitable for the end company because of the interest paid. It didn't matter if the people defaulted as well – that was desirable because house prices were rising so high that they would profit from acquiring and selling the house.

  12. @bauer18 Subprime lenders (like Countryside) sold the loans to banks (non-depository banks, like Lehman Brothers) so that they could replenish their reserves (so mortgage lenders could keep lending). Investment banks like Lehman brothers took the crappy mortgages and paid rating agencies to AAA or BBB stamp them while hiding the really crappy mortgage loans off their books)=. These investment banks then bundled up these mortgages and sold them to investors (companies, commercial banks, etc)

  13. @RichardKoenigsberg Subprime is kinda mean sub-class. Subprime loans are loans that are made to people without credit-worthiness. They totally skip pass the need to check if one is even able to repay the loan prior to the lending.

    Kinda of layman explanation but hope you get what it means. 😉

  14. It is quite puzzling how rating agencies can give triple-A rating to all these junk subprime loan backed bonds. And till today, investors are still paying so much attention to the ratings coming out from them. Can they still be trusted with their ratings?

  15. The word "mort-gage" is derived from the French word "mort" meaning "death" and "gage" meaning "gamble" (its the interest stupid!) interest doesnt combat inflation. interest creates servitude and slavery and it has thruout history. the big lie of the 20th century is that interest somehow fights inflation. interest or usury is destroying us. stop with all of this rambling and attack the real problem

  16. He didn't talk about Freddie and Fannie, loan guarantees, credit guarantees, low interest rates, the community reinvestment act, the encouragement (during the 90's and 2000's by Clinton and Bush) for people to be homeowners. Homeowners= taxpayer. It wasn't just greedy people and it wasn't just government, it was both.

  17. "So Scrooge turned to mortgages 2:55." Here's where you went wrong. A 1977 law that helps-low income people get mortgages by forcing banks to make foolish loans or else litigation. Remember that thing about how the banks WOULDN'T lend to blacks and Hispanics because they were racists? And do you remember how they passed the Community Reinvestment Act so that banks were forced to reduce down payments practically to zero and lend to a lot of people they knew were bad credit risks?

  18. …And do you remember how Wall Street bundled all these risky subprime mortgages and sold them to investors around the world so that when it became clear that those people weren’t going to be able to pay their mortgages banks everywhere were left holding the bag and all five of the Wall Street investment houses either went under or had to be bailed out by the federal government? We'll that's really the cause of the problem that Obama inherited.

    The words “immigration”, “tolerance” and “assimilation” are being used to PROMOTE a program of geNOcide against White children.

    According to International Law, open borders, FORCED integration, and assimilation is GENOCIDE.
    Except they don’t call it GENOCIDE when it’s done to White children.
    Then they call it “multiculturalism”
    Anti-racist is a codeword for anti-White

  20. Not a bad explanation – lose the Cookie Monster props.
    One itty bitty component of the sub-prime mortgage melt-down that was not mentioned here is the fact that it was the US government that created the sub-prime mortgage industry in the first place. The Community Reinvestment Act of 1977 forced banks into making mortgage loans to lower income people. This created the need for banks to come up with various forms of "sub-prime" mortgage loans in order to cater to those who would not normally qualify for a traditional loan.
    In fact, a local bank in my area was prosecuted under this law just a few years back for the practice of "red lining", because they were not giving out enough loans to people who lived in a dirt poor section of the Buffalo area. This, after we had just experienced a crisis that was caused by banks giving mortgages to people who could not afford them.

    That is what happens when you give government too much power over the private sector.
    They just dont learn.

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