posted on Feb, 15 2013 @ 11:36 AM
Originally posted by Julie Washington
Predatory Lending is THE cause for the Systemic Mortgage Foreclosures
[SIZE=4]The blame for this whole mess is most certainly caused by the banks. [/SIZE]
We have somewhat of a more clear picture of the mess than we did in 2010 -- and I certainly don't deny that a good portion of the blame is squarely on
the financial megaconglomerates... along with government sponsored changes that allowed for the commoditization of home mortgages.
-- however --
Such financial shenanigans (yeah, I just used that word) are not possible without a market that embraces it.
It makes no financial sense for someone to obtain a "no money down" mortgage where the payments represent half of their monthly income. Yet by some
reports, a majority of the subprime defaults came from exactly this type of loan.
Underwriters lied on mortgage applications, and many reports indicate a very good percentage of applicants knew about and supported the fabrications.
Here, a vast majority of subprime defaults came from improperly documented or fraudulently documented loans.
Appraisal firms were getting kickbacks from all kinds of sources (real estate firms, title companies, underwriters, and mortgage bankers) to keep
pushing the valuations up for more profitable loan prices. These are people who should never have done any such thing.
Those are three well-discussed issues that have come up after lots of forensic accounting on the mess that put a portion of fault in the consumer's
direction. I've always contended that it's an 80/20 issue (20% being consumers), but that the 80% representing the bankers may not have been so large
if the 20% were not so willing to be absolutely stupid.