Discussion

One is the incidence when financial institutions took an enormous risk using the mortgage barked
security is the subprime crisis of 2008. In this incident a huge amount of a loans was given to the general
public without properly evaluating the loan taker ability to repay the loan. All these loans were backed
by an asset

First, a huge amount of loan was dispersed to the general people without checking their ability to repay
those monies back. These loans are backed by the asset that people mortgaged which would be sold and
the amount will be recovered if the individual is not able to pay the loan back. This is considered as a
house of card because the whole system is not stable, when the crisis hit, people were unable to pay
their loan back therefore the bank management sorted to the auction their mortgage property but the
loans were distributed so recklessly that the number of the people who were not able to service their
loan increase exponentially bringing the huge amount of asset in the market and crashing it the price.

A defaulted debt may be assigned to the lender's claims department or transferred to a third-party
collections agency in various situations. Once you're in default and the creditor obtains a judgment
against you, your salary or tax deduction may be confiscated. "No, you can indeed be arrested for
defaulting on a payday loan," the Regulation And Supervision Bureau, which regulates payday lending at
the federal level, says emphatically. Forgetting to repay a loan is a civil infraction, and a US court can
only inflict jail time for criminal acts. For years to come, you'll have trouble obtaining credit in just about
any manner. Even if you are able to acquire credit in the future, it will be difficult to lock in a good
interest rate. Garnishment of wages if the debt is not paid backThe price of the property was reduced to
people who were servicing their loan found it much more beneficial to default on their payment which
was more than the mortgaged property forth making more and more people defrauded and bank went
insolvent.Just like the house of card, when the crisis triggered there was no stopping and the whole
system of the bubble collapsed.