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A guide to the subprime-mortgage crisis

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Pamela Crowley (Florida)

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Elite Member
Joined
Jan 13, 2002
Professional Status
Retired Appraiser
State
Florida
http://www.pal-item.com/apps/pbcs.dll/article?AID=/20080224/NEWS01/802240323/1008

A guide to the subprime-mortgage crisis
By understanding how problem began, prospective borrowers might avoid foreclosures

The subprime-mortgage crisis is roiling the financial markets. It is fitting to trace the development of this crisis.
Subprime-mortgage lending became possible with the passage of the Depository Institutions Deregulation and Monetary Control Act of 1980. This act eliminated interest rate ceilings and enabled lenders to charge high rates and fees to borrowers. The Alternative Mortgage Transaction Parity Act of 1982 also permitted the use of variable interest rates and balloon payments.

Together with the Tax Reform Act of l986, which eliminated interest deductions on consumer loans but retained interest deductions on home mortgages, they led to the development of a subprime market.
 
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