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Credit Crunch
The
U.S. has been in a credit crunch
for a while now, and that has impacted everything from home sales to
student loans. Lenders are being very strict about whom
they'll loan money to, and even people with strong FICO scores are
jumping through hoops to get approved for mortgages and other loans.
While many people in the U.S. have been able to qualify for credit cards,
mortgages, and other types of financing with little fanfare in the
past, much of that credit has dried up.
The
U.S. is in a credit crunch
partly due to the fact that many people took out subprime mortgages
that had terms like 100 percent financing. A lot of these loans help
people buy more home than they could actually afford, and now they're
having trouble making their monthly payments.
People
also used their homes as piggybanks to pay for everything from home
improvements to college tuition, and as housing values have dropped
many of them are left with little or no home equity. In some places,
homeowners are even finding themselves with negative equity because of
declining home values. According to the New York Times, U.S. households
owed about $1.1 trillion on home equity loans in March 2008.
The
credit crunch has also resulted in record levels of foreclosures. In
June 2008, the number of foreclosure filings rose 53 percent from a
year earlier, according to RealtyTrac. California, Nevada, Arizona, and
Florida are the states with the highest foreclosure rates.
Sources
RealtyTrac
New York Times
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