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Eastvale was one of the cities that were severely struck by the subprime mortgage crisis, which contributed to the U.S. recession between December 2007 and June 2009.

In the 1990s Eastvale’s main landscape was predominantly dairy farms and other agricultural land use. Eastvale tutors remember when the housing market began booming in the early 2000’s. Property development grew to accommodate people who could not afford the expensive housing in Los Angeles and Orange County. Due to leniency in government housing policies, first time buyers qualified for mortgages, and they bought up large portions of Eastvale communities’ homes.

The availability of mortgages to low-income families or those who had previous bad credit meant lots of people were suddenly able to get on the property ladder. As demand exceeded supply, the price of houses went up and up, and people continued to buy, financing larger and larger portions of the property value. Surprisingly this did not deter individuals who wanted to take advantage of suddenly being able to buy property. They thought that they too would see considerable growth in their investment and be able to sell on at a large profit. However, between mid 2006 and mid 2009 the median home in Eastvale had decreased in value by 50%. The buyers could not keep up with their mortgage payments and owed way beyond the current valuation of their homes, and many declared bankruptcy.

Eastvale tutors list many factors that contributed to the crisis, including financial institutions, credit agencies, government housing policies, and consumers. They agree that subprime mortgages were integral to the banking emergency. Subprime lending essentially means lending to people who most likely will experience difficulty keeping up with payments, they exhibit qualities such as unemployment, divorce or expensive medical issues. Mortgage lenders normally keep track of an individual’s ability to pay back credit by looking at their credit score. In general, a person with a FICO score below 600 would be considered a subprime borrower. To make matters worse a subprime borrower would be more likely to agree to exorbitant interest rates, and less desirable adjustable-rate products in order to compensate for the higher credit risk. Unsurprisingly many of those that qualified for the subprime mortgages defaulted, and this is what led to the financial crisis.

In Eastvale, where home prices declined steeply after peaking in mid 2006, it became more difficult for borrowers to be able to refinance their loans. The adjustable rate mortgages reset at higher and higher interest rates and mortgage delinquencies skyrocketed. Global investors drastically reduced purchases of mortgage-backed debt; the private financial system was no longer willing to support the lending. When the world market caught on to the risky and fragile state of the market, it led to a tightening in credit globally and significantly slowed down economic growth in the U.S. and Europe.