That's correct. The subprime mortgage market was all greed. Take Ameriquest Mortgage for example. They offered things like NINA (no income no asset), SISA (stated income stated asset) and NIV (no income verification) loans. That means that you could refinance your home, take cash out (up to 100% of the value of your home) and not have to prove the ability to repay the loan. Ameriquest did this and did it well. Closing costs were high and the rates were much higher than the floor rates. Often times they would put you on a 3/1 ARM with a 5 year prepayment penalty. So when the loan was set to adjust, the homeowner had a hefty prepayment penalty attached so if he tried to refi out of it, then the subprime mortgage company would rape them once more for a parting gift. Meanwhile, the CEO was knocking down about $350 million a year. If you could fog a mirror, you could get a $400K loan. Why did they do it? They knew the loans would go bad. But it was legal. They made their money and then dipped out. In many cases they moved out of the country. It was greed. Plain and simple.
Right, the buyers had no stake in the greed huh? No blame to share? Poor saps that got these loans. They must have been drug into those banks to buy a home. Congress was squeaky clean too.
Sure there is blame to share. But it was greed on their parts, too. If their home was worth $200K and they owed $100K, they were taking out $100K in cash and blowing it. So it was greed on the homeowner's part and it was greed on the Subprime mortgage company's part. It was all legal. NOW, it is not legal. It is very heavily regulated and much tougher to qualify. There is no such thing as a no income verification loan (unless it's a VA IRRL or an FHA Streamline).
Barny Frank and Chris Dodd maybe had something to do with it. And being govt insured made the risk more worth while.
Then again, greed is not a bad thing; people only relate it to bad b/c bad happened. You wouldn't relate being greedy with your time spent with your kids as bad. Greed was not the cause is my point here. There were decades of fraud going on to deregulate. Government policy was the cause. The deregulation started in the 90’s I believe. (could be wrong on that). Greed is a copout and really explains nothing to the root cause of the problem. Greed drives a lot of good in this world.
I'm not trying to call you out here, I'm just trying to get clarification. In post #109 you said "How can you put the entire blame on lack of regulation? The total collapse is much broader than you simply thinking it of a lack of regulations." Then you posted this above (which seems like you are blaming the subprime mortgage crisis on lack of regulation i.e. "govt policy"). You either just contradicted yourself or you should probably clarify.
