What kills me about the whole blame the borrower discussion is that it is implied that our crazy impulse to do desperately needed home repairs is somehow responsible for the crisis. Our wasteful funding of a son’s surgery copayment and partial college tuition is somehow related to the TRILLION dollars lost. No one wants to talk about the defunding of basic services, healthcare, supports for education that suddenly put all these costs on the backs of middle class within only a few years. I wish they would publish the list of who made how much money out of this and what THEY spent it on – then compare THAT to the infamous subprime borrowers. The only problem is that we’d have a revolution instead of an election.

http://www.mysunsetmortgage.com

During a booming housing market offering easy money for any yahoo who could pass a relatively easy DRE exam and read a script, millions of new employees joined banks, mortgage brokerages, real estate agencies, title companies, and appraisal offices with very little experience. Add into that mix obscenely loose lending guidelines that allowed a person with a 580 credit score to purchase a home without verifying their income or putting any money down, and you’ve got a time bomb waiting to explode.

There was plenty of fraud and deceipt, but it was at every level. Mortgage brokers in some cases were making fraudulent W2’s and paystubs, but more commonly there were guilty of knowingly placing borrowers in programs that they would never be able to afford. Borrowers were tapping into every dollar of available credit with no intention of ever paying any of it off. Appraisers were pushing home values. Real Estate agents were actively trying to upsell clients on more expensive homes and facilitating illegal transactions where buyers would put no money down and recieve cash back on closings by paying over-inflated prices. Title company reps would forge and alter documents to ensure that closings would occur quickly and smoothly.

Ultimately it was a system with no policing that failed itself. i don’t know that any one cog in the machine can be assigned the blame. Hopefully the market will correct itself by putting safeguards against such “irrational exuberance” in the future.

no greedy loan officers in your list?
no financial engineers repackaging loans with AAA labels?
no Phil Gramms or other rapacious Texans?

You aim like a ghostly Ronnie Regan just now finger pointing the government as problem one more time

No one should have been selling a mortgage based on the idea that housing prices always go up or that interest rates always go down. Everyone should have a BS detector that would enable them to see through “housing prices always go up”.

The lenders are at fault. The borrowers are at fault. The Administration is at fault. Congress is at fault. Ben Bernanke and Alan Greenspan are at fault. Oh, and all those people hawking no start up capital million dollar schemes on Sunday infomercials are at fault. It’s a big mess. There’s a lot of blame to go around.

The sad truth of it is, a lot of the people who are getting the short end (and liable to get the long end of a bailout) would have been a lot better renting, even with the tax incentives.