You’re wasting your time trying to explain this to some here. They won’t understand it take the time to learn about CRA lending, poor efforts by rating agencies, federal regulators sleeping in the job, lousy underwriting standards by mortgage brokers, banks that didn’t bother to check documents, investment banks creating odd tranches that offered a touch higher yields and buyers who didn’t bother to research their investments. You’re right, the old system worked until around the time Clinton and his party looked to expand things.
In trying to explain the event, that I may leave out one or more particular elements always seems to generate flak. My point was, the whole scenario would never had happened had not Fan and Fred dropped their pants in terms of loan standards. The bad loans would never have been originated in such numbers because there would have been no place to sell them. If there were no vanishing underwriting standards by FNM/FRE, there would have been no +15%/year acceleration in home prices which allowed the serial bogus refis and purchase loans. It was as Bill Black said “criminogenic”. It bred criminality.
I recall very well at the time as I was a mortgage broker going to a Countrywide rah-rah sales party. They presented all the “products” they sold. Walking out of that meeting, stunned, I believed I could get a mortgage loan for a family dog. The hinkier and hinkier products simply left more and more info off the loan application until the borrower’s name & SS # was all that was left, and then they claimed, if you can’t get THAT loan, call us and we will manually approve your loan. I got into the game late. My boss routinely took down $20K+ loan origination fees by getting loans for people guaranteed they would not make even 3 payments. I had trouble with it, I could see it was a pure fraud.