Actually the regulations required all of this to happen.
The regulations weren't relaxed, banks and mortgage companies were forced to give loans to people who couldn't pay them back. The penalties were fines and jail terms.
Sounds like more regulations that did exactly what they were supposed to do.
True, but that is not the only cause of the mortgage mess. Higher and middle income borrowers have high default rates too.
Rates by Relative Income Zip Code1 [footnote 1. Source LoanPerformance. End footnote.]
Delinquency Rate as of August, 2008 [Footnote 2. For mortgages originated between January, 2006 and April, 2008. End footnote.]
Lower-Income Zip Code Subprime: 25.0. Alt-A: 16.1. Total: 21.5.
Middle-Income Zip Code Subprime: 21.3. Alt-A: 12.9. Total: 17.7.
Higher-Income Zip Code Subprime: 19.5. Alt-A: 10.9. Total: 14.5.
Here is a claim by FED governor Duke that the Community Reinvestment Act did not contribute to the mortgage crisis. It did have some effect, so I disagree with her that the CRA had no effect whatsoever.
...serious delinquency rates for subprime loans are high in all neighborhood-income categories, not only those in lower-income areas, as might be thought if the CRA were a contributing force to the subprime crisis.