One of the myths of the housing crisis is that it was caused by homeowners who took out greater loans than they could afford, while banks gave them the benefit of the doubt that they would be able to make an adjustable payment for the long term or would be able to refinance quickly. But nothing could be further from the truth, as banks new they were lending money to people who would never be able to pay it back and it would be a small miracle if they were able to find a more stable loan to refinance into.



The mortgage industry also knew that the boom in real estate prices could not last forever, which only fueled the drive to create more loans and gain more market share in the least amount of time. Almost every Wall Street investment firm handed out piles of money to subprime lenders in order to purchase, securitize, and sell the loans that were originated. The long term viability of these loans were not taken into consideration in the scramble to loan out more money and dump the resulting mortgage securities into the secondary market.

The fastest and easiest way to expand the market for mortgages was to give home loans with a low introductory rate to people who could not qualify for a normal payment. The terms of these loans were often not disclosed to understanding home buyers, who were essentially promised a complete financial program instead of an adjustable rate mortgage. Borrowers who had to overstate their income just to afford the teaser rate were assured they would be able to refinance before the rate adjusted because their property would appreciate -- because real estate always goes up in value.

It is really quite amazing how wrong the mortgage brokers, real estate agents, and Wall Street investment firms got it. But even more unfortunate is that these poor homeowners are the ones that are paying with homelessness and loss of quality of life because they believed in someone else to help them navigate the increasingly complex world of consumer credit and home loan programs. Once mortgages began adjusting, homeowners defaulted and tried to sell; but with so many new homes being constructed already, dumping more properties onto the market depressed prices rapidly in some areas, resulting in waves of foreclosures.

And now, it is all of us, homeowners, renters, and everyone else, who must pay the price for the large scale mortgage scam that was perpetrated on the American people. While subprime lenders have gone out of business by the hundreds, they were merely conduits for Wall Street money. Wall Street, after losing the mortgage cash cow, has been clamoring for bailout after bailout, which has been given to them by the Congress and the Federal Reserve. All of these bailouts have been granted to the financial industry, and now even the insurance and automotive sectors are counting on taxpayer money from taxpayers who can not afford even their own mortgages or credit cards.