Prior to taking this course, I only had limited knowledge on the housing crisis of 2008. I was only six years old at the time that the crisis occurred. Clearly, six year olds do not have an understanding of the economy around them. But, as I got older, I began to hear snippets of the said “crisis” and how some of my closest family friends were affected by it. They were one of many Americans who were forced out of their homes from this crisis. I still did not know what caused them to lose their home. When signing up for this course I was very intrigued by the title and after taking this course I learned just how many people were significantly affected by this housing crisis and how much of an impact was left on the United States.
One of the most historical events in history that negatively impacted the United States was the housing crisis of 2008. During this time period, millions of Americans were expelled from their homes. According to NYU Law News, over six million American households lost their homes to foreclosure. Millions of these people and families were forced into foreclosure- a way to expel people from a place they- and were contractually obligated to sign away their homes. Although there were many causes of the crisis, one of the major ones was subprime mortgages. Investopedia states that subprime mortgages are mortgages targeted at borrowers with less-than-perfect credit and less-than-adequate savings. At the time, this seemed to be a good idea in order to help those who may have low credit scores and savings but it ultimately led to failure. Prior to these types of mortgages, some Americans would not be able to apply for these loans due to low credit scores and low savings. They didn’t have the money or reliability to do so. But, with subprime mortgages, it gave people a chance to become homeowners. These mortgages also helped the banks and lenders make so much money that they did not care of the effect these mortgages had on people. These banks and lenders were acting in bad faith as they were making money off of people they knew could not afford these homes. With a combination of all of these elements, the economy went into disaster. Housing prices plummeted, spending decreased, unemployment increased and people were left with nothing. On the other hand, these big banks came out debt free and had no harm at all.
A real life example of this is shown in a reading from our course called The Big Short by Michael Lewis. This book goes through the housing crisis through the eyes of the men behind it. In the book, Lewis describes how banks worked with CDO’s. A CDO is also known as a collateralized debt obligation. Lewis states, “the CDO had been invented to redistribute the risk of corporate and government bond defaults and was now being rejiggered to disguise the risk of subprime mortgage loans.” These banks would combine Americans subprime mortgages into CDO’s and would trade them between each other for money. This behavior was a recipe for disaster. After months of the big banks’ risky decisions, it all came to an end. So many banks and investors went under while Wall Street investors got off risk free. The crisis was so detrimental to the economy that “In early October 2008, after the U.S. government had stepped in to say it would, in effect, absorb all the losses in the financial system and prevent any big Wall Street firm from failing”. The government needed to come in and forgive debt in order to try and reverse its effects on the economy. These crisis effects had lasted years and the economy did not return to a stable state until four years later.
When taking this course, we have read many different books that were written hundreds of years ago to books written a few years ago. We had touched base on how each of these books relate back to the housing crisis of 2008. Although some of these books are non fiction, there are clear connections between the book and the crisis. It is fascinating to see the connections between these books and how much knowledge I have gained when reading. One book in particular that relates to the housing crisis, is Parable of the Sower written by Octavia, E. Butler.
Parable of the Sower is a futuristic book that was written in 1993 but takes place in 2020. This story takes us through the journey of Lauren and her gated community who experiences a crisis within their community. We learn about the Olamina family which contains Lauren, her father who is a pastor within their community, her stepmother and step siblings. We come to find out that Lauren suffers from a disease called hyperempathy where she experiences other’s emotions just as they do. All is well within the community until there is an outbreak of the drug “pyro”, a drug that makes the experience of watching a fire burn “better than sex” which causes the community to have many arsonists. This drug begins to cause destruction within the community which causes many characters to be expelled from their homes. Prior to being expelled, Lauren’s community began to experience instances of violence and robberies. Lauren states “More and more people are coming over our wall to take what we have, or what they think we have.” (page 117). Those from outside the community would come into their gated community and rob house after house. The community decides that a nightwatch should be created to try and keep the neighborhood safe. However, the drug of pyros, makes this job almost impossible. The community becomes uncontrollable. Those who are on the drug pyros set fire to houses and “While the community tried to put out the fire, and then tried to keep it from spreading, three other houses were robbed.” (page 143). No matter how hard Lauren and her community tried to stop the people on pyros, they caused mass destruction while robbing the innocent people. This danger caused Lauren and her peers to be expelled from their homes. Lauren makes the decision that this is no longer safe and she must leave. She stated “LAST NIGHT, WHEN I escaped from the neighborhood, it was burning. The houses, the trees, the people: Burning…. Everything was chaos. People running, screaming, shooting. The gate had been destroyed.” (page 153). Lauren’s community reached a point of no return. The neighborhood began to burn and chaos was inevitable so there was no other choice but to leave. The people were expelled and forced to leave their homes and family members. Lauren and a few others journey their way North to seek safety. They encounter new members and hardship on the way but ultimately begin their new lives on the land they name Acorn.
It is evident that just like those of the 2008 housing crisis, Lauren and her fellow peers were also expelled from their homes. Although the housing crisis being non fiction and Parable of the Sower being fiction, both had factors leading up to the expulsion of innocent people. Lauren and her community were affected by those acting in bad faith. Those acting in bad faith were robbing the innocent people of the gated community just as the CEO’s were doing to the people who trusted them during the housing crisis. Both the actions of the arsonist and CEO’s, it left innocent people homeless and forced to leave the only homes they have known. These people were forced to leave what they knew and created new lives for themselves all because of the selfish actions of their peers.
Looking back on how much this course taught me, I want to return back to the start of this course. I registered for this course for a concentration requirement. I am an education major at Geneseo so I have not taken any English courses or courses that talked about economic terms. I really did not know the full extent of what the course could be about and to be honest I did not know how much I would really learn. But, after reflecting on this course, I can really see how I have changed and how much I learned. In only a few months I went from knowing a few small bits and pieces, as stated in the beginning of family friends being affected to having a full understanding of the crisis itself. I now have knowledge on CEO’s, CDOs, subprime mortgages, fraud, loans and would have no problem explaining them to anyone. Alongside obtaining knowledge on the topic of the housing crisis, I grew as a person. I can say that in my entire college career I have always hated group work. I did not like collaborating with others in fear that they would participate in bad faith and leave it all to me. My look on collaboration has changed drastically after taking this course. After working with my peers on several mini-collaborations, I gained so much new insight on things I may not have seen if I was working independently. In all the groups I have worked in, there was an equal amount of participation and collaboration. Even if people were absent, they made sure to be present in some other way. From their actions and good faith, I now realize that I enjoy group work and can’t wait to use it in all aspects of my life including when I am a future teacher myself. In regards to my new knowledge, I have reflected on what I have learned and know how to apply it to my life. The insight I have gained on mortgages and fraud is how I personally will go about buying a house when I am older and to always read the fine print.
With the new knowledge I gained, I can look back to recent years and see how history could have repeated itself. Especially, in these past two years there have been many people affected by the COVID-19 pandemic. Unemployment rose and put a lot of people at a loss of jobs and many homeless. This could be a time where subprime mortgages came back as there were many people who had poor credit scores and little money to loan a house. There is a possibility that if this were to happen, history could repeat itself. Now with the knowledge that the economy has on subprime mortgages and how it caused an economic crash, subprime mortgages did not make a comeback and instead other policies were put in place to help those affected by the pandemic.
All in all, I am extremely thankful for all of the new insight and skills I have gained on the housing crisis of 2008 from this course. I want to thank both my professor and peers for making this course enjoyable along with helping me find a new love for collaboration. I look forward to applying all of my new knowledge to my future and will definitely see more courses like this in my future.