Posted: 10/19/07 20:04
by Paul Bartlett
Volumes have been written about the subprime mortgage meltdown and attendant housing collapse, but the pundits have missed the real story:
It was all avoidable.
When loan originators -- banks and S&L's -- held mortgages in their loan portfolios, stringent appraisal, income, loan to value ratio and borrower debt criteria guided the loan approval decision. No longer. Now, originators bundle mortgages -- many of them worthless -- and sell them into the secondary market, where they wreak havoc in pension, retirement and mutual funds.
Greed has transformed this process. Complicit realtors and appraisers have colluded with crooked mortgage brokers. It's all about origination fees.
This will be part of the Bush/GOP legacy. Regulatory agencies stripped of regulatory control -- a president pining to create his ideological vision of an "ownership society" -- equals chaos. Every homeowner who's seen their equity evaporate can thank the GOP for gutting the regulatory process -- and stripping middle America of their main asset -- their home value!
It was all avoidable.
