Would you mind explaining what this excerpt is trying to convey? - Lenders kept giving out loans because they were making profit from purchasing the loans at lower interest and charging a higher interest on subprime loans. (Who were lenders purchasing the loans from?) It eventually became too hard for lenders to obtain funds to invest into mortgage loans. (Where were their funds coming from?) Eventually, buyers stopped looking to purchase homes due to the limited funds available to them and with the spike an interest rate increase homeowners could not afford their monthly (Is this insinuating homeowners monthly payments?) resulting in an alarming amount of foreclosures in the market crash of 2007.

So from what I gather, the foreclosures occurred as a result of high monthly payments that loanees could not afford to repay due to high interest rates. But what puzzles me is why lenders were purchasing loans to begin with if they are the ones lending them out. Or is it that lenders were purchasing loans from other lenders to charge higher interest rates and make even more money? Whats to prevent this cycle from continuing exponentially? Where do lenders get the money to buy loans to begin with and what does that have to do with their difficulty to obtain finds to invest in mortgage loans?