Guide Note
A mortgage is a loan used to buy real estate. Under the terms of a mortgage, the real estate is used as collateral for the loan. Most residential mortgages are set for payment durations of 15, 20 or 30 years.
Fast Facts
- July 17, 2008: 30 year fixed-rate averaged 6.26%1
- July 17, 2008: 15 year fixed-rate averaged 5.78%1
- U.S. mortgage lending rates had been rising since the subprime mortgage crisis
- The federal government has cut rates to help prevent the mortgage crisis from causing a broader economic recession
Mortgage Crisis
On Friday, July 11, 2008, the second largest bank failure in U.S. history took place as federal regulators took over the IndyMac Bank.2 The bank closed its doors three hours early on Friday and re-opened on Monday under federal control and a new name. In addition, the Federal Reserve opened up more credit for two other failing lending institutions: Freddie Mac and Fannie Mae. Together, these organizations either funded or guaranteed over half of all mortgages in America.3
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