What relationship existed between subprime mortgages and foreclosures with home prices fell

Question

The value of homes remain generally higher than the mortgage, so foreclosures decreased

many people with the prime mortgages cannot make their payments, so foreclosures increased

Banks offered more some mortgages to avoid further foreclosures

The federal reserve lowered interest rates to avoid further foreclosures

Answer 1

Foreclosures increased as home prices fell because many homeowners with subprime mortgages were unable to make their payments. As the value of their homes decreased, they were left owing more than their homes were worth, leading to a higher rate of foreclosures. This also had a negative impact on the overall housing market, causing further decreases in home prices. The federal reserve lowering interest rates may have provided some relief for homeowners struggling to make their mortgage payments, but it did not prevent the increase in foreclosures caused by falling home prices and the subprime mortgage crisis.