Question
Which of following correctly depicts what caused the bubble to burst in the housing and mortgage markets in 2007? Question 4 options: A) Government regulation
Which of following correctly depicts what caused the bubble to burst in the housing and mortgage markets in 2007? Question 4 options: A) Government regulation of sub-prime loans reduced the volume of loans causing housing prices and sales to decrease. B) Wall Street (private) firms were the major issuer of mortgage backed securities in the 1990s and 2000s, but reduced their market participation in the mid-2000s which led to fewer mortgage loans and eventually a decline in housing prices. C) The U.S. stock market decline in 2007 was caused by weak foreign investment and an economic recession, and this caused housing prices and sales to decrease. D) The overleveraging of homebuyers, an up-tick in interest rates, and developing overcapacity in the housing market caused home prices to decline and foreclosures to increase as many people could no longer pay their mortgages.
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