Explain the role that flippers played in the collapse of the mortgage markets in 2008

Answer 1

?Flippers, also known as speculators, were those who took advantage of loosened credit standards and a booming real estate market to purchase homes and then turn them around for sale very quickly in order to realize the rapid gains that were occurring in the housing market. In many cases, there was little or no investment in the homes and the flippers had so many closings on homes in one day that there was the effect of check-kiting - they were stringing down payments and profits from other sales into one big chain that could just keep going as long as housing prices kept rising. However, the flippers did not have the funds for the monthly payments and once the housing market slowed down they found themselves holding too many properties with no equity and payments they could not manage. With nothing to lose because of no equity in the homes, they walked away from the properties, leaving low-value homes in foreclosure in many neighborhoods, another factor that resulted in declining prices.
Often the flippers misrepresented themselves as buyers who would be moving into the home when they were just investing and never did reside in the home.