A lesson a day

Dear friends..From today onwards I will post something interesting that we may not be aware of or fully understand that took place around us or in the world..todays's lesson is "subprime mortgage financial crisis "..

What is "subprime mortgage financial crisis?"

According to wikipedia:"
The subprime mortgage financial crisis refers to the sharp rise in foreclosures in the subprime mortgage market that began in the United States in 2006 and became a global financial crisis in July 2007. Rising interest rates increased newly-popular adjustable rate mortgages and property values suffered declines from the demise of the housing bubble, leaving home owners unable to meet financial commitments and lenders without a means to recoup their losses".

Let's learn some new words today:

Foreclosures:
Foreclosure is the equitable proceeding in which a bank or other secured creditor sells or repossesses a parcel of real property (immovable property) due to the owner's failure to comply with an agreement between the lender and borrower called a "mortgage" or "deed of trust".

In other words, when you purchased your home, chances are you took out a home loan and your lender took a security interest in the property. In the event that you cannot make your mortgage payments, this security interest gives your lender the right to foreclose--auction off your house and keep the proceeds in order to recover its investment.

Housing Buble:
A real estate bubble or property bubble (or housing bubble for residential markets) is a type of economic bubble that occurs periodically in local or global real estate markets.

Got it? Class dismissed!