Subprime Mortgages Research Paper Example | Topics and Well Written Essays - 1500 words

Subprime Mortgages - Research Paper Example   A few days after this statement, the crisis was on its full swing. Necessary actions were taken to fix the crisis situation, such as huge among of capital was injected in the economy by the government, interest rates were cut down for the borrowers, but the matter went out of hands. The heat of this issue and a series of other training events are still prevailing and companies are trying to overcome the economic catastrophe. In the backdrop of this scenario, this study would be evaluating the facets of the subprime crisis and its consequence on organizations in the global marketplace. Identifying the origin of the subprime crisis is a significant as well as interesting investigation that would be presented through this study.     There are various causes which can be evaluated and discussed while investigating subprime mortgage crisis, but in this study, the focus would be specifically on the housing bubble and banking segment. The problem that would be discussed and scrutini zed in this study would be the contribution or role of the banks and financial institutions in the subprime mortgage crisis.     Highlighting the role of the bank would also lead the readers to unveil various other causes of the financial crisis that would be obvious after understanding the actual position of banks in the global economy. The hypothesis is the assumption that a researcher makes regarding the direction and result of the study because actually going through all the process of research. This gives the researcher an idea about the way the research study would turn out to be. In this case, the role of banks would be specifically discussed in case of subprime crisis. Banks do have the significant contribution towards liquidity crunch and creation of housing bubble, which finally led to the subprime crisis.   Subprime signifies the credit status of the borrowers of subprime loans and does not correspond to the interest rates of such loans. Any type of loans offered to the subprime borrowers which do not satisfy the prime guidelines of a loan is termed as subprime loans. It is a process of lending money to a group of borrowers who are classified as subprime borrowers and they do not qualify for obtaining loans at market interest rates because of the fact that their credit ratings are too low (Duhigg â€Å"Pressured to Take More Risk, Fannie Reached Tipping Point†; Labaton â€Å"Agency’s ’04 Rule Let Banks Pile up New Debt†). Ideally, the decrease in the price of the commodities in the market results in the augmentation of demand of the commodity.  Ã‚