Liszt was born in the slums of New York to a black man who began working after graduating from high school in 2000.

There is a saying: if you love her, send her to the United States, and if you are cruel to her, send her to the United States.

Due to his low education and lack of family background, Liszt could only work as a temporary worker.

Go as a courier today, and work on a construction site tomorrow.

Fortunately, when he graduated, the construction industry was still relatively prosperous, and Liszt could make some money every once in a while.

In 2002, after two years of work, Liszt had less than $2,000 in his bank card.

At this time, he made a decision that affected his life: he bought a $100,000 house in the suburbs of New York City with zero down payment.

Originally, with his credit situation, it was difficult to apply for a zero down payment to buy a house.

But his neighbor Jack happened to work for a subprime loan finance company and learned that as long as he took out a loan from their company, he could buy a house with zero down payment, but at a slightly higher interest.

Fed up with the dilapidated houses in the slums, Liszt gritted his teeth and bought a house with zero down payment.

Anyway, you can apply for a long repayment period for a mortgage in the United States, and you only need to repay a few hundred dollars a month.

Just when he went through the formalities and moved into the new house with some shabby furniture, the market price of the $100,000 house was already $120,000.

Then, by the end of 2003, it had changed from $100,000 to $200,000.

Liszt made another major decision: sell this house, buy three houses with a total market value of nearly $800,000 in one go with a down payment ratio of 5%~20%, and take out a loan to replace it with a new pickup truck.

When Liszt returned to the ghetto in his new pickup, he immediately became a celebrity in that neighborhood.

This lasted for more than two years, and by 2005, with the rising price of New York houses, Liszt's house had reached a market value of $1.5 million.

Liszt, who tasted the sweetness, sold the three houses again, and exchanged them for two mansions in the Manhattan area in one go, and also exchanged the pickup truck for the latest Cadillac Escalade.

Although saddled with millions of dollars in loans, the monthly changes have exceeded Liszt's income.

But thinking that house prices would continue to rise, Liszt mortgaged one of the houses to another subprime mortgage company, and the money obtained was used to repay the loan.

However, there is no 100-day red flower, and no person is good for a long time!

Since 2006, the momentum of housing prices has been very good at the beginning, and Liszt has been calculating how much his value has increased every day.

However, soon home prices across the United States began to fall.

The second mortgage finance company began to urge Liszt to repay, where did Liszt get the money to repay?

Then the house was taken away and auctioned!

It's good if the house price doesn't fall, and there is still money left after the auction, but now the house price has fallen below your own purchase price.

No matter where it is, people buy a house to buy up, not down!

The more it falls, the less people buy.

The less people buy, the faster it falls.

Without the money for the second mortgage, Liszt could not repay the mortgage on the remaining house.

A few months later, Liszt moved back to the slums, and the mansion once belonged to the bank!

Nan Ke has a dream, this is basically Liszt's experience in the past few years!

This decline has actually laid the groundwork in the rapid development in the front.

In the five years leading up to 2006, the U.S. subprime mortgage market grew rapidly due to the continued boom in the U.S. housing market and the low level of U.S. interest rates in previous years.

As the U.S. housing market cools, especially short-term interest rates rise, subprime mortgage repayment rates have also risen sharply, and the repayment burden on homebuyers has increased significantly.

At the same time, the recent continued cooling of the housing market has also made it difficult for homebuyers to sell their homes or refinance them through mortgages.

This situation directly led to the failure of borrowers of large batches of mortgage loans to repay their loans on time, which in turn led to the "subprime mortgage crisis".

In 2006, house prices fell faster because the previous housing prices were too high to recover the money lent by the banks in the short term, and because those who were unable to repay the mortgages used their houses as collateral, most of the houses were piled up in the hands of the banks and could only be disposed of at low prices.

Since 2006, a unique sight on the streets of the United States has been the increasing number of real estate advertisements.

Price reductions, promotions, gift certificates, sellers are doing their best, but there are still few buyers.

In Washington, D.C., many newly built real estate projects can only be advertised as "temporary rental" after poor sales.

Persistently low housing prices have led to Americans who were rushing to buy houses at high prices, and then they were also caught up in American mortgage companies, especially the riskier subprime mortgage finance companies.

On April 2, 2007, the day Jiang Hui arrived in New York.

New Century Financial Corporation, the second-largest subprime mortgage provider in the United States, declared bankruptcy.

The subprime mortgage company, which had assets of more than $1.7 billion at the beginning of 2007, shrank to less than $55 million in just three months.

The next day, Jiang Hui, who had just finished jet lag, turned on CNN and saw that they were disclosing that:

Throughout 2006, U.S. subprime lending amounted to $640 billion, about double the amount it had three years earlier.

Subprime mortgages account for 20% of the total size of the U.S. mortgage market, and the total value of subprime mortgage-backed bonds in the hands of financial companies and hedge funds has reached $1 trillion.

It should be explained here that in the United States, the so-called subprime mortgage is a loan issued to a borrower with low credit.

Unlike ordinary mortgage loans, the simple process of a subprime mortgage is as follows: a person with lower credit gets a loan from a subprime lender, the lender sells the mortgage to an investment bank and refinances it with the proceeds, and the investment bank repackages the debt into bonds and issues them in the capital market.

Compared with "preferal" loans for high-credit customers, subprime loans have higher interest rates and higher returns, but they are also risky.

But in the past few years, when the U.S. housing market was booming, people wanted to buy a house to increase their assets.

Mortgage companies are also willing to issue subprime loans to achieve high yields. Some subprime loan finance companies have even lowered the "threshold" and launched loans such as "zero down payment" and "zero documents" to attract lenders, resulting in increasing business risks.

The U.S. has also seen that it is not normal for housing prices to rise too quickly, and the Federal Reserve has raised interest rates 17 times in a row in the last five years, raising the benchmark interest rate from 1% to 5.25%.

The sharp rise in interest rates has increased the burden of mortgage repayments on homebuyers, and mortgage defaults have continued to occur, which in turn has accelerated the bursting of the bubble in the U.S. housing market.

The subprime mortgage crisis in the United States began to ferment rapidly and has a tendency to spread.

The mountain rain is coming, and the wind is full of buildings!

However, for Korn Ferry, this may mean that a harvest season is just around the corner!

(End of chapter)