The subprime mortgage crisis is an ongoing event that is affecting buyers who purchased homes in the early 2000s. The term subprime mortgage refers to the many home loans contracts during the coastal housing bubble in the United States from 2000 to 2005. Home loans were made at a subprime rate and have now led to widespread foreclosures on home loans and people being forced out of their homes because they can't afford the payments. (Chote) The cause and effect of this crisis can be divided into five main reasons. When subprime mortgages began to flourish, the term housing bubble was born. The term refers to the period when home values ​​increased dramatically and consumers often borrowed at less than the lowest rates. People believed that the price of their homes would increase and they could then refinance for lower payments. The problem with this mindset is that many people haven't just refinanced for lower payments, they've also refinanced for personal expenses. Home price inflation meant that homeowners suddenly had more equity and were able to spend the money as they pleased. All good things must come to an end sooner or later. In late 2005, the housing bubble burst and home prices began to decline. People who refinanced, especially those who financed with variable interest rates, suddenly found that their homes were valued at much less. The housing market was flooded with homes for sale as homeowners with variable rate and interest-only loans could not continue making payments. (Greenspan) The increase in the number of homes for sale has caused home values ​​to further decline. Keeping in mind that the main reason for the mortgage crisis is the high number of defaulted home loans, which triggered foreclosures and fire sales. The other four contributing factors include high-risk loans, the housing market collapse, mortgage fraud and speculation. High-risk loans are over-leveraged loans, where the financing is done more than the values ​​suggested to be provided. (Greenspan) This can lead to an immediate fire sale when the property falls below the loan amount and to avoid further losses banks start increasing the installment. The housing market has come under pressure due to the excessive pressure placed on most homeowners by rising rates. This affects people's ability to make payments, resulting in defaults. That's the problem with the housing market explosion. The third major factor causing the mortgage crisis is mortgage fraud.