I lived in the middle of the feeding frenzy during the housing boom in California. I watched as people who had no credit, no down payment and were paying interest only loans were buying $500-800,000 houses and I wondered what the heck was happening.
60 Minutes covered the crisis as well: "House of Cards"
It was another nervous week for the world's financial markets and for Wall Street. In the last six months, Americans have seen their investments shrink, their property values plummet, and the country edge closer towards a recession. At the heart of the problem is something called the subprime mortgage crisis, which began last summer and continues to ricochet through the economy.
It sounds complicated, but it's really fairly simple. Banks lent hundreds of billions of dollars to homebuyers who can't pay them back. Wall Street took the risky debt, dressed it up as fancy securities, and sold it around the world as safe investments. It sounds like a shell game or Ponzi scheme; in some ways, it was a house of cards rife with corruption, greed, and negligence. ...read on
How were they being approved when I had to jump through hoops? Now we know:
Fourteen companies, including some of the world's largest banks, are being investigated over possible accounting fraud, improperly securing loans and insider trading during the sub-prime mortgage scandal.
The FBI said yesterday that it had opened criminal investigations into improper lending in the American housing market. Neil Power, head of the FBI's economic crimes unit, told journalists that the investigation includes the companies that securitised the loans and investment banks that bought those products, as well as the developers and sub-prime lenders. "We're looking at the accounting fraud that goes through the securitisation of these loans," said Power. ..read on
As Duncan says, all these people weren't victims, but there was an industry wide push to scam these people. If you've never tried to get a loan before, it's very complicated and I ended up trusting my mortage broker to work for my best interests---who screwed me too, but before it was fasionable. Have you ever tried to read and make sense of all those documents? And I hope the GOP takes Malkin's advice too..."Subprime victims are the new heroes. Welcome to the politics of foreclosure."