Bad loans. By the end of 2007 home prices had fallen 10% below peak values, at which point 8 million homeowners owed more on their mortgages than their homes were worth. (In other words, 8 million homeowners had "negative equity.")
Bad loans. It is estimated that homes may lose as much as 20 % to 30 % of their peak values. At this point about 15 million households will owe more than their homes are worth.
If HALF of these homeowners ultimately default, it will produce $1 trillion in losses for lenders AND WHOSE FAULT WILL THAT BE? Who is to blame for these loses? Who bears ultimate responsibility for these huge loses?
WHO SHOULD "EAT" THESE LOSES? WHO ENGAGED IN VERY POOR BUSINESS PRACTICES? WHO SHOULD HAVE KNOWN BETTER? WHO TOOK ON THIS RISK? WHO WAS GREEDY? WHO CAUSED THIS CRISIS? WHO MADE THESE BAD LOANS?
The lenders made these decisions. The world economy will suffer for it and those who committed fraud should be prosecuted ...but ultimately this too shall pass.
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