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Finance 431: Property-Liability Insurance - page 19 / 35

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Sub-Prime Crisis

Now the housing market began to falter even more, and this led to even more defaults for homeowners who did not want to invest in a home that was losing value.

With homeowners defaulting on their mortgages, all these MBSs and CDOs based on receiving mortgage payments from sub-prime mortgages defaulted as well.

With the ABSs defaulting the investment market that dealt with these ABSs and all the players involved began to lose a lot of money.

These recent events continue to hurt the housing market.  Housing prices continue to drop, and people who want to currently buy houses who need loans are having trouble finding good deals.

This all leads to even more defaults on mortgages today causing even more defaults on ABSs, which in turn is causing further losses to the investment market, thus the sub-prime crisis.

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