Lending Standards

Jaime Luque
Additional contact information
Jaime Luque: 1University of Wisconsin-Madison, USA

Chapter 22 in The Subprime Crisis:Lessons for Business Students, 2017, pp 189-196 from World Scientific Publishing Co. Pte. Ltd.

Abstract: Las Vegas was the city of dreams, filled with luxurious casinos, restaurants, and an unparalleled nightlife. However, this life of paradise was only short lived when tough times came about the residents of Las Vegas. According to RealtyTrac, during the economic hardship of 2008, in the city of Las Vegas approximately 1 in every 13 homes were being foreclosed giving Las Vegas the highest foreclosure rate in any metropolitan city in the U.S. during this time period. Unfortunately, the real estate market business was struggling heavily, particularly American Invsco, a realtor company based out of Chicago. Invsco saw the opportunity of the housing bubble and capitalized on it by renovating approximately 678 condominiums. Due to the economic turmoil of 2008, it was confirmed that approximately 490 condominiums ended up being foreclosed. Before the housing downturn, Invsco encouraged many consumers to invest in real estate and supported using credit to invest beyond their means. Unfortunately for Invsco customers and many more, about a year and a half later their investment would be equal to $0, as Invsco was no longer making any profit. Why during this economic expansion were borrowers encouraged to take out loans they would not be able to pay off? How did this risky lending really come about and start to encourage borrowers into an endless cycle of debt?…

Keywords: Subprime Crisis; Great Recession; 2009 Recession; Mortgage; Financial Market; Preventing Recession; 2009 Crisis; Interest Rates (search for similar items in EconPapers)
JEL-codes: G01 G1 (search for similar items in EconPapers)
Date: 2017
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.worldscientific.com/doi/pdf/10.1142/9789813200043_0022 (application/pdf)
https://www.worldscientific.com/doi/abs/10.1142/9789813200043_0022 (text/html)
Ebook Access is available upon purchase.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wsi:wschap:9789813200043_0022

Ordering information: This item can be ordered from

Access Statistics for this chapter

More chapters in World Scientific Book Chapters from World Scientific Publishing Co. Pte. Ltd.
Bibliographic data for series maintained by Tai Tone Lim ().