Mortgage crisis, causes of financial crisis in USA and World (part 5)
The term word of “mortgage” comes from the legal term in French. It means: The death of a pledge. This is quite different from home loans/ credit. In a mortgage, you get credit. Then, you have a house. The house that you submit to the appropriate credit. You may occupy it for a mortgage you have not paid off. Because the house is not yours, so bad mortgage payments (maybe you still has no money), the house you automatically can not be occupied. From the beginning there was the pledge that it is still not your house yet or never yet, So, when you do not pay the mortgage, the pledge was considered dead. Thus, you should go away from that house.
Lately fact, the evidently is is the “new way” is a graveyard for supergiant companies. Several major investment banking firms such as Lehman Brothers collapsed and closed down because of it. How can it has happened? whether related bankruptcy investment banking firm with bad credit mortgage?
Apparently, the great transaction had happened since 1990 to 2004 did not only caused by the existence of a tax break. “The financial businessman” saw the various facilities such tax as an opportunity for further grow and also increased profits. Communities keep continue to be overwhelmed by the advertising facility offering housing loans (mortgage). lender’s matcmakers met with a massive supply of house buyers, agreed. As a result, house prices and land and other property kept creeping up moreover the bank rate.
As the result, not only the banks are getting smarter, the houseowners are also more intelligent. Houseowners whom had already paid off the house and they remortgage program again to buy the next house. For those who do not meet the requirements of any mortgage, be allowed to get mortgage loans hoped that the price purchased and will keep continue and ascend up in the future. If one time, the money borrower can not pay the credit, the bank assumes that they are still lucky, because the house can be confiscated and resold for the higher price. So, the bank will not afraid and hesitation in giving this mortgage.
Actually, the bank has a strict rules and limit as stipulated in the banking laws. But there is always ways for businessman the New way is the Bank can work with ‘other banks’ which we call it as investment banking.
Related posts:
- Mortgage crisis, causes of financial crisis in USA and World (part 6)
- Mortgage crisis, causes of financial crisis in USA and World (part 7)
- Mortgage crisis, causes of financial crisis in USA and World (part 3)
- Mortgage crisis, causes of financial crisis in USA and World (part 4)
- Mortgage crisis, causes of financial crisis in USA and World (part 1)
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