"hk" wrote in message
m...


I think you are overstating the social engineering part here, and not
even mentioning the major causative effect, the greed of lending
institutions and their co-conspirators on wall street.


The social engineering (and I said it was well intentioned) is what enabled
the greed of the financial institutions. (notice I didn't say "lending").
And then the government failed to exercise
the required oversight for a social program it initiated.


I don't blame local banks. They were simply complying with the law and
taking
advantage of the opportunity to issue more mortgages including the high risk
ones
because they could sell them off and wash their hands of them.



Keep in mind that since WW II this country has promoted low-cost lending
methods to help lower income households buy a home. I'm sure you recall
practically nothing down VA loans and minimimal down FHA loans. By thge
standards of those days, many of those loans were "sub prime."


I bought my first house with a VA "backed" loan when I was released from the
Navy.
The VA basically guarentees the amount of a typical down payment, or part of
it, based on the rational that someone exiting the military and trying to
buy a house did not have years of civilian level income behind him/her from
which to save the down payment. You *still* had to otherwise qualify for
the loan under the standards of the time, meaning credit rating, income,
etc. to indicate your ability to repay and be approved.

Not quite the same as the sub-prime loans starting in the 90's where all you
had to do was consume oxygen and sign your name to get a loan.


The packaging, selling, repackaging and reselling of the more recent
"subprime" loans was a major factor in the recent financial downturn,
along with the greed of all the others who were players. I see what
happened more as a result of unregulated markets than expanding housing
opportunities to lower income buyers.


Both. Chicken and Egg.
A fact that cannot be argued is that many of the loans were issued with full
knowledge
that the probability of default was 100 percent.

Eisboch