Video Captions: Algebra Applications: Data Analysis

Video Captions: Algebra Applications: Data Analysis

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Title: Algebra Applications: Data Analysis

Title: The Mortgage Crisis

Narrator: In 2008 many banks in the United States

began to fail, and many more stopped lending money.

The reason was that many homeowners were defaulting on

their mortgages.

Banks were not getting paid for the money they lent, and

as a result they stopped lending money.

With less money flowing through the system the US

economy went into a recession.

The stock market plunged and hundreds of thousands of jobs

were lost.

The root of the economic crisis was the problem

around mortgages.

A mortgage is a loan.

A bank lends you the money to buy a house and charges you

interest on the loan.

As you pay back the mortgage you not only pay back the

amount that you borrowed, you bay back the interest on

the loan.

Mortgages are as old as banks themselves.

People have been buying houses this way for centuries and

banks have been successfully lending money this way.

So what happened in 2008 with this successful system?

Why were so many people suddenly not able to pay

their mortgages?

We will investigate this problem first by analyzing

what a mortgage is, then we will look at different types

of mortgages, especially the ones most responsible for the

mortgage crisis.

In particular, we will look at so-called sub prime mortgages

to see what made these types of loans so toxic to

the economy.

So as a first step let us start with an investigation of

what a mortgage is.

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