FHCE 3300 Study Guide - Midterm Guide: Amortizing Loan, Federal Housing Administration, Fannie Mae

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billion in equity capital lost on wall street: nearly 25% of the workforce was unemployed, higher in some cities, more than 11,000 banks closed, banking system in state of collapse, many homeowners could no longer make payments. 1933: more than half of all home mortgages were in default. 2007: 3. 6% mortgages: more than 1,000 mortgages were foreclosed every day, many homeowners were forced to sell their homes when their mortgages came due. Banks began to demand mortgages be paid in full rather than extend the terms. Homes declined in value, people owned more than homes were worth. Affected homeowners were often the middle class, who were facing poverty for the first time. Response by the federal government: 4 steps. Tra(cid:374)sfor(cid:373)atio(cid:374) of the (cid:374)atio(cid:374)"s housi(cid:374)g fi(cid:374)a(cid:374)(cid:272)e syste(cid:373): home loan bank system (1932, hoover, 12 regional banks, increased access to capital, extended terms of mortgage.

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