Wonder why we have so many foreclosures now? Here’s an advertisement from “Home & Land” a Monmouth County, New Jersey real estate promotional magazine from the summer of 2005. Reading the ad, you can see how loose the lending standards were.
Chase’s “Simply Signature” mortgage program involved nothing more than your signature, a mirror placed under your nose to make sure you were breathing and wonders of wonders; you had a mortgage to buy your home!
Chase was not the only one’s making “Simply Signature” loans, Washington Mutual, (gone), Countrywide (gone), and since 2006 – 345 banks have “imploded” due to their loose lending practices.
So this is the reason we are in the mess we’re in.
Total deregulation of the banks, where they made loans, forgetting the safe practices they had used before, in which the requirements were; good credit, a reasonable amount for a down payment, and good appraisal practices. That was all thrown to the wind, in a mad dash to make as many mortgages as possible, then selling them off in bundles called derivatives to un-wary investors so they could make more unsafe loans.
You can thank the politicians, along with the banks, with their strong lobbyists paying off both sides of the aisle for the deregulations that have led to the present recession. Some blame the Fed for loose money standards, but no one made the banks drop all their safe lending practices. If you think of what you would do if you had 500 thousand dollars to loan out as an investment… would you just give it out to anyone? I wouldn’t if I really wanted a safe return on my money!
For a list of the failed banks go to Implote O Meter. This site keeps track of failed banks
Failures of Savings & Loans Crisis due to de-regulation Wikipedia
And, of course the banks are STILL fighting deregulation, see New York Times article: Crisis, Banks Dig In for Fight Against Rules