Banks that lent money to people who couldn’t pay it back and people who lied on their mortgage applications are not at fault?
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The banks controlled the process , they implemented the “no doc” policies , they knew the loans were crapola and didn’t care because they had them pre-sold to YOUR PENSION FUND...
WRONG:
All banks expected a payback of thier loans. Nobody loans money to people and then doesnt care if it is paid back?
Now, that does not mean that some of the loan programs offered were “smart” in a business sense because many were not.
The “no doc” loan in therory is a good loan for some people. For instance, many business owners make lots of money but cannot prove all their income because of tax deduction allowance, depreciation of assets, etc. These loans were designed for such people. Also, you had to prove that the income was reasonable for someone in the same career or line of work.
However, over time, the “no doc” loan was used to give anybody a mortgage.
No doc loans were common, but made up only a small percentage of the mortgage market.
The biggest default rates are in the GOVERNMENT sponsored loans such as FHA, which still to this day has the some of the loosest qualifying criteria.