U.S. banks handed out a lot of loans to people that didn't really deserve them. This was encouraged by the government as some method of moral development for the "less fortunate" as if, somehow, giving someone a home would put them in a position to pay for it by the simple virtue of owning a home? Literally, billions of dollars were loaned to people with no money down and little to no proof they could pay the money back. Loans were given to these people on a wing and a prayer thanks, in part, to Fannie Mae, Freddie Mac and morons at large corporate banks (who either didn't bother to do their homework on whether it was a good investment or simply decided it didn't matter because they'd be bailed out).
These same entities then sold off the risk of those idiotic loans as packaged securities to third parties, other banks, foreign companies/governments and insurers. Those terrible loans then went upside down. In the process, the value of a home in America was destoyed. Doesn't matter if you lived there for 30 years or 3 months, when things collapsed it happened fast. The recovery won't be nearly as fast (and may not happen at all). So, things got ugly.
{More After The Jump}
{More After The Jump}
