Between 2000 and 2006, housing prices in the United States increased by about 90 percent, but this increase abruptly reversed. How did the fall in housing prices cause the nancial system in the United States to freeze up? OA. OB. 00. OD. When home prices fell many homeowners defaulted on their mortgages. Banks foreclosed on these homes and were stuck with undervalued assets, leading to enormous losses in their mortgage portfolios and many bank failures. When home prices fell consumers started purchasing multiple homes as investments. Banks were unable to keep pace with the additional demand for mortgages, leading to losses in bank capital and many bank failures. When home prices fell, overall homeowner wealth increased leading to increased consumption. The transition away from home purchases towards consumption of goods and services weakened banks' balance sheets, resulting in many bank failures. When home prices fell the overall demand for homes increased and consumers withdrew deposits from banks to purchase new homes. These deposit outows caused banks to run short on required reserves, forcing regulators to shut down many banks