unlike other big financial scandals such as Enron and the savings and loan crisis, the perpetrators are not a cadre of easy-to-finger folks in the executive suite.
Instead, they're everywhere in the mortgage food chain. Borrowers who lied about their income, mortgage brokers who flogged risky loans, appraisers who inflated home values, lenders that originated dicey mortgages, Wall Street firms that packaged them as securities and sold them, ratings firms that said those were safe investments - many participants in the market pushed the envelope, or, in some cases, may have committed outright fraud.
The one clear culprit is greed, a culture of consumerism that led countless people to seek a quick buck in the go-go real estate market of the past decade.
UPDATE: If you are interested in keeping up with news on mortgage fraud, check out this blog maintained by a California attorney and Certified Mortgage Banker.
This is very scary for all of us. It's a clear indicator of how interconnected we all are and how fragile our seeming independence is. Even if you own your home out right but can't sell it, it's worth very little and the rich can get richer loaning you pennies on the dollar. Some parts of this feel like the beginning the Great Depression. "Live for today" and "hope for a better tomorrow" doesn't put food on the table, pay bills and by medicine.
ReplyDeleteSomething else you have to remember about this whole thing is that the Bush administration was also pushing their "ownership society" plan that covered the privatization of Social Security and as I once heard him say, "the right for anybody to own a home" (to paraphrase).
ReplyDeleteFrom that point, lenders of every stripe, as you point out, created the labyrinth financial mechanisms that would only serve to be a black whole to anyone who does not speak fluent financial double-talk. Meanwhile, the Bushco gang are letting every red flag get yanked in the hopes of keeping the illusion alive.
The right (no, privilege) to purchase a home should remain a milestone in one's life based upon your ability to participate in the community based on your skills which is rewarded by monetary compensation. Work hard, use you bean to manage your money, and execute your plan based on a sound financial platform.
You don't do a no money down 60 year mortgage no matter how hard that corner broker is pushing, period.