Bankers, real estate agents & wall street who's to blame?

I see it as a result of pure greed on the part of the mortgage lending industry. Most of these high-risk mortgages were made to people who should have been denied. But since the industry was used to making big bucks over and over from the refinancing of high interest rate mortgages, when this stopped, they couldn’t just be happy with their profits. I know a lot of people say it is the fault of the borrower, and sometimes this is true, especially if they improperly disclose their income and/or expenditures. However, when you see these lending institutions portraying themselves as ‘friendly and community minded’, with logos like ‘the hometown bank’, they characterize themselves as trustworthy and honest. And as we have seen with this mortgage crisis, they are anything but trustworthy and honest. Many of these loans were interest only loans for the first five years or so and then you started paying on the principle, which often doubled the monthly payment of the loan.

 The real estate agents are not guilt free either, because they were aware of the loan conditions and over sold the customers.  If you look at the characteristics of this scam it really isn’t much different than the one that put this country into a major recession in the 1980’s.  Then houses were overvalued by two and three times their real market value and loans were also given at projected values a few years in the future.  All of this was done to create more revenue for the lenders and agents in the business and it worked as long as the economy kept growing.  The problem was that IBM had a major downsizing that made the pyramid scheme collapse.  In the small city I call home there was, on the average 50 houses for sale at any one time and IBM was a major employer.  After they pulled out there were over 5,000 on the market, most of them owned by the bank.  Houses that were valued at $50,000 could be purchased for $15,000.