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Fantastic_Bar3109 OP t1_j6926li wrote

Reply to comment by Past-Adhesiveness150 in Found some old Reddit threads from 15 years ago talking about the 07-08 recession by Fantastic_Bar3109

Yes I was 15 in 08 in Canada. Didn't see the repercussions as it wasn't as bad as in the US

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Past-Adhesiveness150 t1_j69bodz wrote

So it was pretty bad.

Predatory Lending. The banks would give out loans for more than people could afford, on the "idea" (wishful lthinking at best) thuuat the economy would keep growing & people wouiuld make more mouney. They would give a loan where you wouldn't have to make your first payment for 3 to 6 months.

A lot of people figured that banks/lenders knew what they were doing. They wouldn't give out money if they didn't think you could pay it back.

That's where it loses me tho. We're they hoping to then own these homes after people defaulted? We're they thinking they'd make money on the loan for a bit ( because all you pay is intrest for the first few years) & then own the house to sell? Don't know. But it sucked.

I saw 2 of my neighbors lose thier homes. Friends of mine got divorced, after all the stress of losing thier house, not finding housing...kids too.

We bought at the peak also. But I made sure we didn't borrow more than we could afford. We also had a good local bank. They knew that of they fucked up, they would only be screwing someone who was a local.

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THICC_DICC_PRICC t1_j6af81v wrote

You left out the part where the whole subprime lending thing was driven by the government, either through Freddie and Fanny, or through putting regulatory pressures on lenders(they downgraded the credit ratings of banks that didn’t participate). Started under Clinton, expanded under Bush. It was widely bipartisan so no one ever stopped to ask some questions if it’s sustainable. It should surprise absolutely no one that congress investigated itself and found nothing there.

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greenerdoc t1_j6ajdew wrote

People always seem to forget that homebuyers amd investors were also are guilty of FOMOing into buying property, leveraging up on their bets, taking loans they had absolutely no business taking out, buying houses they knew they couldn't afford.

This wasn't solely a government or bank thing. What made this work was that everyone was able to pass the risk down to the next party in line because the mortgage credit rating system was fucked (someone rated risky surprime loans as safe as the traditional mortgage because the thought was that everyone pays their mortgage, historically)

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Past-Adhesiveness150 t1_j6b9shj wrote

It's the American dream. Like I said, people didn't think that experts... the banks, would give them more than they could afford.

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