Ten Years After The Great Recession: Where We Are Today

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The Great Recession: Will It Happen Again?

Dear Clients:

As we are in our 10th anniversary year of the Great Recession, I would like to tell you what happened and if we will ever revert back to that time.

It really started unraveling in mid-2006, even though most of the media refers to the collapse in 2008. Incredibly irresponsible lending was rampant in the early 2000’s, spurred by big political pressures to open up the possibility of home ownership to more and more Americans, to the point where many of the new owners did not have the financial ability to sustain their real estate ownership. Our regulators lost control of mortgage regulation, allowing many risky loan products and loan underwriting guidelines to fester in the market. Greed took over amongst both lenders and borrowers, causing a full array of bad economic gambles that eventually exploded, leading us into the Great Recession. If you want to read a great book about how this all unfolded over the last three decades, I highly recommend the book, “Reckless Endangerment,” by Gretchen Mortensen. She does a great job piecing the malfeasance together. Trillions of dollars were lost by both homeowner’s, banks, and investors worldwide. It is shocking no one went to jail over this, but you will know who should be in jail after reading this history on the subject.

Are we out of danger of this occurring again? Never say never, but the mistakes that were made back then have been regulated out of our current lending system. For the most part, those that have taken out mortgages in the past 10 years, have had to go through a rigorous qualification process. Current underwriting guidelines will help protect against another economic disaster. Most home values have recovered to pre-recession levels these days. Summing it up, we all should try to learn from our past mistakes so they are not repeated. We will always work to secure you a mortgage that works with your current situation. We will never tell you to do a certain loan program if you will not be able to afford it.

I found the article below to be a very good synopsis of what went wrong in the mortgage market and why. It is a good read it you have time:


  • Ken Thayer, President of Residential First Capital