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Why did housing prices rise rapidly during 2002-2005? Why did the mortgage default rate increase so sharply during 2006 and 2007 even before the current recession began?
1. Some charge that the Crisis of 2008 was caused by the
a. Regulations designed to make housing more affordable increased the demand for housing and drove housing prices upward.
b. Regulations designed to make housing more affordable decreased the number of sub-prime loans and made home buying a safer investment.
c. Mortgage lending standards tightened, and therefore mortgage loans for housing were only available to buyers purchasing highly expensive homes.
d. Home buyers were required to make larger down payments and this increased the demand for housing, driving housing prices up.