IMHO at the margins, bad actors did make what was bad worse. But I think the crisis would have happened regardless.
The bad actors being the people who did not do proper underwriting and verification (“liar loans” or “stated income loans”)
It's funny that somehow people want to hold people who lie on loan applications blameless. Aren't the victims of the bad underwriters the people they sold the loans to?
"You should have known I was lying and not lent me the money."
(I don't deny that predatory lending exists, but I don't think it was a major contributor to the crisis. I think home buyers and underwriters colluded because they were afraid of missing out on a hot housing market. And for many years this had been the right decision. And back to my original point, when it became the wrong decision, people looked for a simple answer, preferably a one in which they were blameless.)
I did not intend to imply that the people submitting fraudulent applications are blameless.
But I expect better and more from professionals working in lending operations to do their due diligence and verify incomes. I believe I read about underwriter who were simply signing out stamping that they verified the loan application, but did not actually check anything, committing fraud also.
Comments
IMHO at the margins, bad actors did make what was bad worse. But I think the crisis would have happened regardless.
It's funny that somehow people want to hold people who lie on loan applications blameless. Aren't the victims of the bad underwriters the people they sold the loans to?
"You should have known I was lying and not lent me the money."
(I don't deny that predatory lending exists, but I don't think it was a major contributor to the crisis. I think home buyers and underwriters colluded because they were afraid of missing out on a hot housing market. And for many years this had been the right decision. And back to my original point, when it became the wrong decision, people looked for a simple answer, preferably a one in which they were blameless.)
I did not intend to imply that the people submitting fraudulent applications are blameless.
But I expect better and more from professionals working in lending operations to do their due diligence and verify incomes. I believe I read about underwriter who were simply signing out stamping that they verified the loan application, but did not actually check anything, committing fraud also.