In 2007, the Great Recession hit the real estate market. As a result, there were unprecedented increases in foreclosures—approximately 8 million homes were foreclosed—and short sales due to losses of income and depreciation in the value of homes. The situation was compounded by loans secured by real estate, for which borrowers did not qualify. There were also questionable loan products with adjustable rates, creating a situation where borrowers could no longer afford their properties. As a result, from 2007 to 2011, the real estate industry dealt with short sales and the REO resale market.

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