Who Caused the Housing Crisis?

Mortgage and Lending with Advantage Mortgage

I caused the housing crisis. So did you. So did the crazy neighbor down the street with 15 cats. So did the politician that voted for many things you agreed with - and sometimes things you didn't agree with. Your crazy nephew that has jumped from one multi-level marketing idea to another was also responsible. That guy down the street with the fancy cars? Yup, he's in on it too.

It wasn't just one person. When your crazy neighbor down the street decided to buy a rental property for each of her cats, her actions pushed house prices higher. When the politician voted to allow Fannie Mae and Freddie Mac to continue with limited oversight, he contributed to the meltdown. When your crazy nephew joined that investment club and bought 10 rental properties in Las Vegas, he contributed to the problem. And the guy down the street with the seemingly endless supply of exotic cars? He was busy providing data to the industry that rated mortgage-backed securities. Turns out his data had a few holes in it.

The only point that I'm trying to make is that the financial meltdown that occurred in the mortgage industry did so because of a variety of factors. Greed played a role on every level; however, it would be unfair to blame the entire fracas on one or two players.

My advice is to take what you hear with a grain of salt. When you see statistics that say mortgage fraud is up 300% you should question the information. Mortgage fraud is up because it's actually being investigated. When new legislation is passed to curb abuses under the guise of consumer protection, you can bet something entirely different will happen. From what I have seen so far, it has only made things more time intensive and more expensive for the consumer.

Thanks for listening and I'm sorry your neighbor's cats got foreclosed on last week.

Comments (5)

Charlene Hammontree
616 Realty LLC - Rockford, MI
Meeting the needs of Buyers and Sellers in MICH

Mark, I think you made a very good point. I worked for Countrywide back in the late 90's. I worked on the subprime side. (another blog for sure)


Subprime was created because not everyone fit into the cookie cutter conforming loans. There was big money to be made. My take on this mess is that there will be something else that comes down the pike that isn't called "sub prime" but will be for the millions of people that have faced foreclosure and shortsale over these past years. Might have more of a down payment, credit rating a little higher. There is too much money to be made on these loans as liket he sub prime! Mark my words.... another round will phase in!




Sorry about the Cats!

May 24, 2010 02:12 PM
Mark Hall
Realty One Group Cascadia - Vancouver, WA
Homes for Sale Vancouver Washington

So very true. I don't have time to point fingers. The only way out is to help buyers get into homes that are being sold at all time low prices. Our recovery won't start until we have sold through this inventory.

May 24, 2010 02:13 PM
Randy Benefield
Trademark Property Services & Real Estate Inc., CalBRE, 01976861, 01442405 - Petaluma, CA



I agree that the media plays up the stats for mortgage fraud. I do think that the masses do follow their leaders. The Glass Steagall Act of 1933 should have never been repealed in 1999. Many did get greedy. Unfortunately the Mortgage Brokers are taking the heat and being pushed out by the big guys. That is sad. Even Greenspan promoted taking lines of equity. I hope that we Americans have learned valuable lessons through this.

Thanks for the blog, great comments!

May 24, 2010 02:14 PM
Mark Aalto
Advantage Mortgage - Portland, OR
NMLS: 116708

Wow - thanks for the comments.  I forgot to add something too - have any of you seen what the modification agreements look like?  Most have a rate fixed for a few years with severe penalties for early payoff.  Sounds an awful lot like a sub-prime loan - pretty ironic.  Hope you are doing well!

May 24, 2010 02:16 PM
Margo Currie
Exit 1 Stop Realty - Saint Augustine Beach, FL

Interesting... thanks, and thanks to the others for their comments. It's a question with many answers, depending on who you're asking.

May 24, 2010 02:19 PM