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Exactly,the banking system had some pretty hard fast rules it worked with for many years. For most mortgage seekers you had to have enough income to meet monthly obligations and you needed a substantial down payment in order to buy a home. When those rules were thrown out in the trash it was only a matter of time.

it was also the fact the original lender did not care if there was a default because they were out of the risk by selling the note.

It is so bad that many notes can not be found. Note holders have actually lobied, and got, lost note reconstruction laws modified. (you don’t actually need to have the physical note if the judge can order the note as paid to prevent a future holder demanding payment.)

I suspect some of the sleazier bundles will be found to have duplicate sales for the same mortgage promisory note.

We are going through a financial surgery, there is going to be a recovery healing time and better in the long haul.

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ATTENTION: STEALING ELECTIONS ON FNC

Yep. And when you did make a down payment, it couldn’t come from a ‘piggyback loan’.

Even if Wall Street hadn’t sometimes been lax in slicing and dicing mortgage-backed securities, there’d still be a lot of bad mortgages out there—looking to roost somewhere.

Absolutely I can remember in Britain when you needed minimum 10 - 15 per cent down payment and only 3 time the major breadwinners salary; at one time they did not even count the wife's salary because it was considered that she would take a career break to raise the children. Nowadays or at least until a few weeks ago it was not unheard of to give 5 times combined salaries and little or no down payment instead a secondary loan to cover that or some form of guarantee.

It is a mess but IMHO both the borrowers and the instituations are at fault there are very few borrowers who did at not at least have some doubts they would not be able to repay the debt year after year. Many would have realised it meant both of them continuing to earn the salaries they were and hoping against hope that interest rates, utility bills etc etc did not go up substantially.

Bottom line is of course you should not lend money to people that stand a good chance of not repaying it but also those borrowing IMHO must bear some of the responsibility.