Subprime Mortgage Markets
I. Introduction
Today, the economy is rather shaky and some have uttered the "R" word and even the "D" word. Is the nation in a recession or a depression? While these ideas are discussed, there are fingers that have been pointed to at least one cause. Much of the financial fiasco in the U.S. economy is blamed on the subprime mortgage market. One may wonder why this is such a significant problem when it only affects one market sector. Theoretically at least, subprime markets would work and render profit for companies because the interest rates are so much higher than they are for the prime markets. In essence, banks take greater risk but they also mitigate that risk with the higher rates of interest. Of course, the situation is much more complex than that. In delving into the problem, current literature can explain just what the subprime mortgage market is and what is being done to alleviate the problems it has created in recent years.
II. Review of the Literature
In an article published in Lawyers USA, there is attention to Bill HR 1852 which attempts to allow the FHA to back the refinanced mortgages that were provide to subprime borrowers ("U.S. House Passes subprime mortgage aid bill," 2007). The bill would help the borrowers who had become delinquent in their mortgages ("U.S. House
Passes subprime mortgage aid bill," 2007). The bill was passed and one argument for its support went to the idea that the American Dream is hurt as many families face foreclosure ("U.S. House Passes subprime mortgage aid bill," 2007). Jane Bryant Quinn (2008) addresses the problem in the context of another article by noting that the Federal Re