1. How is a financial crisis defined? Explain briefly.

2. What is the distinction between prime mortgage vs. subprime mortgage borrowers. Briefly discuss.

3. There were several mortgages that grew in popularity during the 2000's before the housing market crashed; i.e. subprime mortgages. Describe each briefly: NINJA mortgage loans; interest-only mortgage loans; negative amortization loans; and ARM loans.

4. What were the 3 factors that drove consumers to demand more homes and thus contributed to the rise in housing prices (between latter 1990's to mid 2000's). Briefly discuss each.

5. When did the housing bubble burst? Why did this cause problems?

Answer rating: 100% (QA)

Understanding the Housing Crisis 1 Financial Crisis A financial crisis is a severe downturn in the financial system that disrupts the flow of credit a... View the full answer