The key to understanding the bursting of the housing bubble is to understand that the bubble was created by lowered lending standards which included 100% financing, adjustable rate mortgages, stated income loans, interest only loans, teaser rates and loans targeted at those with poor or no credit.
It was Fannie Mae and Freddie Mac that set the lending standards as they purchased or guaranteed nearly 50% of the mortgages issued in the United States.
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