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re: Why were house prices going up like crazy during the housing bubble?
Posted on 9/18/17 at 11:09 pm to Langland
Posted on 9/18/17 at 11:09 pm to Langland
quote:
But the thing that bothers me is that the people who were paid to see it, either didn't see it coming or didn't give a frick.
Tranches were the problem. All these mortgages were grouped together and sold off. Everyone claimed they were AAA rated, including the agencies like S&P they were paid to rate these securities.
The reality is that most of the mortgages were subprime, due to the fact that income verification was not required. The community reinvestment act CRA, required lenders to prove they were not discriminating against buyers. The government loosened restrictions and forced banks to handout subprime mortgages
While it was not the only cause, I believe the original bill set the bar lower for many lenders and they got addicted to the much larger customer base.
This post was edited on 9/18/17 at 11:18 pm
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