I agree. But, the other point is the bank should have verified income before disbursing the check. That was their obligation. As the article said, the banks hoped to pass the entire blame onto the borrower of its lack of due diligence.
Alas liberal political fodder again....
newsflash, self employed people do not always have “verifiable” income because they have small corporations that become their expense vehicle.
A person taking LEGAL deductions can dramatically reduce income to very low levels but live a very comfortable life.
The issue is the use of inflated valuations to allow banks to have virtual 100% loan to value loans.
If you want to “punish” the banks then restore the pre-2005 bankruptcy rules allowing for lien stripping. The secured portion of the loan is reduced to the current value of the house. Since this is court approved with the supervision of the bankrupcy trustee, the valuation games are not so available to the bank.