At a Congressional hearing held Tuesday before the Senate Banking Committee on the foreclosure scandal, a member of the public and affected homeowner interrupted the testimony of a Chase banker, shouting that Chase’s testimony was perjurous or filled with lies before being escorted out.
The subprime mortgage crisis is an ongoing real estate and financial crisis, characterized by a fall in U.S. housing prices, a rise in mortgage delinquencies and foreclosures, and severe disruption in the shadow banking system, with major adverse consequences for the economies of the U.S. and Europe.
Approximately 80% of U.S. mortgages issued to subprime borrowers were adjustable-rate mortgages. After U.S. house prices peaked in mid-2006 and began their steep decline thereafter, refinancing became more difficult. As adjustable-rate mortgages began to reset at higher rates, mortgage delinquencies soared. Securities backed with subprime mortgages, widely held by financial firms, lost most of their value. Global investors also drastically reduced purchases of riskier mortgage-backed debt and other securities. The result has been a decline in the capacity and willingness of the private financial system to support lending, tightening credit around the world and slowing economic growth in the U.S. and Europe.