Blame flies for high-risk mortgage meltdown

OBTW wrote:

remember 3 or 4 years ago when the Feds were all riled up because lending instituions were refusing loans to HIGH risk applicants - or charging HIGHER rates, or requiring HIGHER down payments.
It was characterized as 'racist'- and the banks were attacked for denying people the 'American Dream" - cause they had poor credit.
Remember the Georgia and New York 'Anti-predator" laws that made it illegal to charge higher interest to higher risks? That shut down mortgage underwriting for a brief period - because it destroyed the linkage between interest charged and credit risk to the bank.
The Banks got the message ---give a loan to any sucker with a pulse ---just make it a back end deal.
So the feds loosened the rules, Moody's found a way to rate Subprimes for selling in the secondary market --and all the clever loans were created so that my cat could have qualified.
And the banks avoided political accusations of 'discrimination" for trying to avoid making high risk loans to people that could not afford them then or on the backend.

John wrote:

Lets see. I bought a house with no money down, a 1 % interest rate, and unreal low monthly payments. I did not pay the taxes or insurance for several years, AND didn't make payments for six months.
So the bank forcloses. What am I losing???? I have no equity even if the property values had not tanked. The bank is the loser. I just have to rent again.
Why not worry about the prime borrower who has to move and now will lose that 20% down payment.