The 2008 financial crisis was caused by risky lending practices encouraged by HUD Secretary Andrew Cuomo in 2000. He ordered Fannie Mae and Freddie Mac to buy mortgages from marginal homeowners, encouraging lenders to issue risky loans. These loans were bundled and sold to Wall Street as secure investments, fueling a housing bubble. When demand dried up as everyone who could buy a house had, home prices fell and many borrowers owed more than their homes were worth. This caused the value of bundled mortgages to drop, bankrupting investment banks and insurance companies who had invested heavily in them. The crisis will only end when real estate prices stabilize as landlords buy up homes and rent them out.

1. Wuh happened? A financial guide for Bob & Sheri

2. The groundwork for our current financial and real estate meltdown was laid in 2000, when HUD secretary Andrew Cuomo ordered Fannie Mae & Freddie Mac to buy mortgages of marginal homeowners. source: http://www.villagevoice.com/2008-08-05/news/how-andrew-cuomo-gave-birth-to-the-crisis-at-fannie-mae-and-freddie-mac/

3. This encouraged mortgage lenders (Countrywide, WaMu) to write risky mortgages to dubious borrowers and then pawn these new mortgages off on Fannie & Freddie.

4. Fannie & Freddie would bundle hundreds of mortgages together and sell them to Wall Street, which in turn would sell them to large retirement funds as secure investments backed by the federal government, which they weren't at the time.

5. This went on until everyone who could buy a house had bought a house

6. With no more buyers available, demand for homes ceased. Folks trying to sell their homes had to lower their prices, albeit to no effect.

7. Now many borrowers owe more on their mortgage than their houses are worth. Some are throwing in the towel and abandoning their homes and unaffordable mortgages.

8. Now the bundles of mortgages have less value, but since no one knows how much less, investors won't buy them.

9. Investment Banks on Wall Street (Bear Sterns, Lehman Brothers) had bought lots of these bundles of mortgages. In fact some banks worth $1 billion had bought $40 billion of mortgages using financial leverage.

10. When these mortgage bundles lost 1/40th of their value, it wiped out all the capital of the investment banks. Bear Sterns & Lehman Brothers went bankrupt. Merrill Lynch sold itself to Bank of America for a third of what it was worth just 2 years ago.

11. Meanwhile, insurance companies invented insurance against losing money on these mortgage bundles. That's right - insurance against losing money on investments.

12. Certain foolish insurers sold trillions of dollars worth of this insurance, called Credit Default Swaps. Now they wish they hadn't. AIG, the nation's largest insurer, is about to go bankrupt on it.

13. When will it end? Who will save us? the US government? Oil Sheiks (soverign wealth funds)? Wall Street fat cats?

14. Carlton Sheets to the rescue! Not him exactly, but thousands of neighborhood landlords like him

15. Real estate prices will not stop falling until there's a reason. Once prudent real estate investors can profit from buying houses and renting them, the market will normalize. It's that simple. Landlords will buy up the glut of houses on the market and rent them out.

16. Once rents comfortably cover mortgage expenses and upkeep, real estate investors will step into the market. They will earn a living and build home equity to retire on.

17. Landlords (real estate investors) will win. The value of homes will fall and may not recover for many years. People that should never have been sold a house may lose their house. Big Wall Street banks will lose. Companies that borrow from those banks will have trouble borrowing. Local banks and businesses will be largely unaffected.

18. Congratulations, you now understand current financial events better than either presidential candidate. And certainly better than Andrew Cuomo, who kicked off this mess.