Pouzanov I. Factors of influence of the real estate market to the global financial crisis
DOI:
https://doi.org/10.31498/2225-6407.10.2014.36363Keywords:
mortgage loans, securitization, subprime mortgages, deposit insurance, financial institutions, banks, innovative mortgage scheme, risk models, encumbered estate, defaulted mortgage letter, the principal amountAbstract
The article examines the emergence of the U.S. mortgage crisis and its impact on the global financial crisis. Global nature of the crisis has been due to securitization - disaggregation of mortgage products in the form of high-risk subprime mortgages. Securitization is provided a permanent stream of payments, guaranteed unprecedented profits and huge bonuses for senior management of banks and investment funds. Designed by U.S. financial institutions, a number of innovative products related to subprime loans, intended to maximize the benefits and not increase the efficiency of their work, which involves a decrease in operating costs and minimize payments. Deposit insurance with the government guarantee has added a new impulse to provision of bad loans and the emergence of other ways of taking on excessive risk. Schemes of introduce innovative products, which were based on mortgages have been designed to diversify risks as much as possible to ensure payments, often remained hidden for borrowers to circumvent regulatory and accounting provisions to limit the abuses in lending and risk-taking. The factors and conditions for the implementation mechanism of innovative mortgage schemes are analysing.References
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