Mortgage Crisis

The mortgage crisis, part of the 2007-2008 financial crisis, occurred when many homeowners couldn't afford their mortgage payments, often due to risky lending practices and declining home values. Banks had issued numerous subprime loans to borrowers with weak credit, expecting rising house prices. When prices fell and interest rates increased, borrowers defaulted, leading to huge losses for lenders. This triggered a chain reaction, causing a credit crunch, bank failures, and a severe economic downturn worldwide. Essentially, it was a collapse caused by over-lending, risky investments, and homeowners unable to repay their loans, undermining the financial system.