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What happened? An Economic Meltdowr <br />sub-prime oroblenn Wh tiac.� me <br />rtlid-2007 ekwelov�,d mtc: 'LIF 1 arl.:: <br />crer <br />nieltdown and the coliapse Olf th M <br />M h <br />fierm <br />The Fed and Tre,,Iz r a', I., I d i I <br />f nto wo rld mlzi rk� s, <br />anoroach Whic!^� na rr is a r r,)� <br />Distribution of sub-prime r i S t hrougin denvative, <br />i ob,� 7� 'I <br />Droducts spread r,sk glIhj vvilh a Oet or cver- <br />w <br />heated housing assets <br />Low rate's -and, e—d 1XI <br />confloence <br />Low rates created cheap mor"gac <br />and lenderc, <br />stop checking, cmdil to <br />Mortgages ,vere sold to FNNIA /i =i-#PAC <br />;M Bad loans were rPackageo with g000 oneq wito <br />MBS <br />EnUifies <br />Rees rnsc a <br />d o r <br />tmev had qnorl c-� fl- - �n b or gin@P- <br />. <br />FASSR chancied, a-1-7ount.m,x .ark-c-rna. <br />mid-strearn <br />Figure 4. Cumulative Delinquencies for Jumbo Adjustable Rate f"ages by %nnboa and Year of <br />Origination (Percent), Jun 08 <br />2.5 <br />2,0 <br />1.5 <br />1.0 <br />'tit, <br />4.0% <br />30 <br />2.5 <br />2.0 <br />i's <br />0,0 <br />0 2 4 6 8 10 12 14 163 18 20 22 24 26 2- 30 <br />Months Since Origination <br />Loans lssue(f In 2006 --*— Loans Issued 41 2007 <br />Odc :10 "0 Z" 0 ow� <br />t,w— Nst A�iw tw, <br />Mo.-Mage. defaults grow <br />ratp- dr, <br />