The “man behind the curtain” is the “big banks”

How the big banks are fueling legislation that is hurting the housing market but will benefit them in the long run.

When we look back at the crazy housing market in the mid 2000′s, there were a lot of things that fueled crazy loans and crazy home prices. However, the dominant factor was rating agencies were lax or in on the profit. Brokerage houses were packaging MBS (Mortgage Backed Securities) and making large profits on the transactions. Legislation that was in place was not adhered to. In the end, there were products available that should not have been. Originators (like me) tried to advise people (I can’t tell you how many times I had a conversation where I told a client “I can get you approved for a larger loan than you are probably comfortable with. Let’s work to find something that you can afford within your budget”) but the lure of skyrocketing housing prices caused home buyers to pass on logic and bet on the come. There were poorly conceived loan products available. No one disputes that fact. However, the response to that fact has created a far worse outcome. Read more