I guess you didn't read the article YOU posted. This is a case of predatory lending NOT a case of Pedro outsmarting a loan officer. The real estate agent balls out lied to them and probably lied to the lender as well in order to get her commissions. That agent probably should belong in jail.
I used to think there was a large portion of responsibility that should be spread rather evenly and that individual homeowners were in large part guilty of taking out irresponsible loans - the key point though, comes down to the burden of responsibility, which imo does largely come down on the IBs that packaged many of the deals. I don't think the large IBs acted any more/less responsibly than other parties in the system - but the scale at which they were operating required a greater burden, which they were quick to underestimate or ignore. My 2 ticks.
I'm guessing Pedro doesn't have that house anymore, so HE sure didn't make out like a bandit from that deal..... Now, who DID make out like a bandit from all those bad loans.....? Hmmmmmm.........................tough one.................
In this story, the real estate agent that got paid commissions for selling a house she KNEW would be foreclosed on soon.
The r.e. wasn't backing the loan with her own money. Soooo......"someone" had to accept the deal that Pedro was willing to make for that loan. Now, the real question is - would YOU?
Pedro didn't make the deal. He didn't go to a lender and say "Hey I only make 15k per year can you please finance 750k for a house?". He went to a real estate agent and said I can afford $3k/month can you get me into a house. The agent lied to the buyer and more than likely fudged the loan application numbers on Pedro's behalf to trick the loan officer into the loan. The buyer in this case was worried that they couldn't afford the house but the agent again reassured him that it would all work out. So the agent sold the scam to both the buyer AND the lender in order to make her commissions. This is why in this particular case I see the real estate agent as the at fault party.
Man, she's like a small time crack dealer on a street corner. Locking up these petty crooks ain't going to change anything. The big kahunas that supplied the drug to the masses are the large Wall Street banks that packaged, repackaged and then refurbished those asset-backed CDOs. They were the ones that pressured the real estate agents to sell homes at all costs, forcing them to approve loans to those who didn't qualify--even encouraging the applicants to lie about their income. This American Life ran a series on the housing crisis two years ago which I thought was excellent. It brings light on those who actually schemed and crafted the whole shenanigan starting from the get go: real estate agents, loan officers, you name it, all the way to the Wall Street bankers. The Giant Pool of Money: http://www.thisamericanlife.org/radio-archives/episode/355/the-giant-pool-of-money Return To The Giant Pool of Money: http://www.thisamericanlife.org/radio-archives/episode/390/return-to-the-giant-pool-of-money How Wall Street Made The Mortgage Crisis Worse: http://www.npr.org/blogs/money/2010...w-wall-street-made-the-financial-crisis-worse
If you are talking about the movie, it's fairly decent but just watch it on HBO. I am not sure it's available for download.
i just might have to requote this every couple of pages, so that the rest of you fools who don't understand how everything the government gets involved with turns into a tremendous bubble with plenty of pain to go around but never an ounce of blame for the government. stay tuned for more- re: government subsidized student loans re: government subsidized health care re: government controlled social security re: federal reserve subsidized treasury market