Lending Standards

Las Vegas was the city of dreams, filled with luxurious casinos, restaurants, and an unparalleled nightlife. However, this life of paradise was only short lived when tough times came about the residents of Las Vegas. According to RealtyTrac, during the economic hardship of 2008, in the city of Las Vegas approximately 1 in every 13 homes were being foreclosed giving Las Vegas the highest foreclosure rate in any metropolitan city in the U.S. during this time period. Unfortunately, the real estate market business was struggling heavily, particularly American Invsco, a realtor company based out of Chicago. Invsco saw the opportunity of the housing bubble and capitalized on it by renovating approximately 678 condominiums. Due to the economic turmoil of 2008, it was confirmed that approximately 490 condominiums ended up being foreclosed. Before the housing downturn, Invsco encouraged many consumers to invest in real estate and supported using credit to invest beyond their means. Unfortunately for Invsco customers and many more, about a year and a half later their investment would be equal to $0, as Invsco was no longer making any profit. Why during this economic expansion were borrowers encouraged to take out loans they would not be able to pay off? How did this risky lending really come about and start to encourage borrowers into an endless cycle of debt?…