Effect of Real State Crisis in the World Economy

of citizens that had the American Dream. He wanted to increase the percentage of home
ownership. Around the world and here in the United States if you have the need to buy, sell,
Manufacture, finance or invest you have been affected by President Clinton’s influence. I am
going to explore the main reason that caused the greatest financial collapse since the great
depression of the 1930s. I will explain some of the many effects of attempting to make
American home ownership more affordable.
mortgage industry. They set the guidelines for what it took to get a mortgage in America.
FHA also would facilitate the purchase of mortgages on the secondary market that fit their
Guidelines. This allowed mortgage brokers and mortgage wholesalers to go out and originate
loans that fit the FHA guidelines. These loans were then sold in the secondary market. The
two biggest investors on the secondary market are Freddie Mac and Fannie Mea. Both of
these agencies are backed by the country’s government. With the government backing these
agencies they were very attractive investment for investors from around the world.
In order to increase home ownership the guidelines would have to be expanded to
include more Americans. The ‘decision makers’ set forth to expand the guidelines.
Mortgage brokers partnered with bankers and Wall Street investors. This partnership
yielded an avenue to broaden the guidelines to originate mortgages the rest of the country
followed suit. The mortgages were sold to Wall Street investors. The Wall Street investor
would then bundle the mortgages to be sold on the world’s open market, as mortgage back
securities. Around the world, investors, mutual fund managers and finical opportunists
consumed these mortgage backed securities. Money was being made, more Americans
The development of creative financing and the subprime market accelerated the ability
for more Americans to get mortgages. In the...