The Housing Bubble and Your Finances

As of July 2010, the world is still in the midst of the greatest period of economic hardship since the Great Depression. In the United States alone, millions of people have lost their jobs and their homes because of the economic downturn, caused in part by the collapse of the housing market. The crisis may have affected you greatly, as it is affecting so many others, but the link between the world economy and your own finances is a complex one.

Causes of the Houses Bubble

In the years leading up to the beginning of the financial crisis in 2007, banks and other lenders began offering mortgages to people who could not afford them. Prior to their decision to offer high-risk mortgages, it seemed as if property values around the country would only continue to increase in value. Thousands of real estate investors were buying, renovating, and then reselling houses at a profit.

This system could only hold together as long as the value of houses continued to rise. Lenders believed that offering these loans would drive up their value even further. In reality, rather than investing in the growing housing market, they were putting hundreds of billions of dollars on the line by tricking everyday people to take mortgages they could not repay. As soon as the already-weakened economy led to a higher foreclosure rate than creditors predicted, the value of the lenders’ credit plummeted.

For those of us who are not billionaire bank owners, the effects of this crisis have been millions of foreclosed homes and lost jobs. Millions of Americans have faced financial difficulties that few people living today have experienced.

Contact Us

If you are one of the people whose financial troubles have gotten out of control, bankruptcy may be the best way to alleviate your debt and rebuild your credit. To learn more about foreclosure defense, contact the experienced Boston bankruptcy lawyers of Joshua Spirn & Associates today by calling 800-975-5346.