The cause of recession has been pointed to several economic scenarios that ultimately placed the country and the whole world in recession. The decreasing sales of various industries have led to massive lay-offs as company after company declares bankruptcy because of their inability to post any profit.

Lending institutions are having trouble posting profits because their debtors do not have the ability to pay for their current loan. This is caused by unemployment as companies continue to terminate their employees. Eventually, this trend has affected other countries to the point that they also declare recession because of the economic troubles felt worldwide.

One of the well known reasons why the country is currently under recession is the sub-prime mortgage crisis. This type of financial fallout has caused lenders to declare bankruptcy which is replicated on larger financial institutions. In fact, the lending intuitions were the first ones who declared bankruptcy because they are unable to collect payment from those who are under sub-prime mortgage.

More than 60% of the mortgage transactions were sub-prime mortgage when it has reached its peak in 2006. When the crisis started to affect the industry, sub-prime mortgage became one of the “keys” to the current economic struggles.

To be clear about sub-prime mortgage, first you have to learn what a “prime mortgage” is. In gist, a prime mortgage is the regular mortgage transactions offered to those who are in good credit rating. Since their records show that they are able to pay for their bills and other loans on time, they could enjoy a relatively better interest rate which could range from 3% to 5%.

On the other hand, the sub-prime mortgage is a type of mortgage offered to those who are unable to reach the credit rating required by lenders. Instead of enjoying the regular or “prime” mortgage, they are offered with a “sub-prime” interest rate. This interest rate is very predatory because the interest rate could reach to as much as 10% – whopping difference of as much as 7%. This could easily debilitate anyone’s finances since the interest rate is too high and the monthly payment rate could be a lot more compared to those who are enjoying the “prime mortgage” rate.

It is quite ironic since those who are enjoying the lesser rate have the ability to pay more while those who are suffering through sub-prime mortgage do not have the financial capability of paying for the monthly mortgage.

Eventually, the sub-prime mortgage crisis started to debilitate different lending institutions. Because of the high interest rate, not everyone has the ability to pay for the monthly mortgage bill. Some resorted to foreclosure while others just simple left the property without even informing the lender – all because of the increased interest rate. The plan of offering those who are unable to qualify for the standard mortgage rate has backfired causing not only the fallout of the mortgage industry but triggered recession that affected millions worldwide.

Fortunately, the sub-prime mortgage crisis is slowly being dealt with by the government and non-government organizations. If you think you are under a predatory-type loan, get in touch with FHA or your local authorities as soon as possible. You need to get refinanced quickly so that you can get out of the interest rate. The savings you’ll gain when you refinance would be very impressive that you’ll be able to use the money for other purposes.

Do not let yourself be a victim of sub-prime mortgage. Get help fast so that you can start freeing yourself from the financial burden from this predatory mortgage loan. It has not helped the country and it will never help you in any way.