Spending years running a Secondary department of a mortgage company and seeing the sheer amount of dishonesty from borrowers was quite astonishing. The absolute abandonment of morals and responsibility in our society gave rise to the mortgage crises devastating our financial system. I have been hearing endless screams of people blaming the greedy “fat-cat” Wall-Streeters, the bankers, and the Government. There is plenty of blame to go around in all these areas, but it still boils down to the reality that there was an insatiable demand for these risky loans from our public. Without that demand, the product would not have been made available to satisfy it.

Borrowers demanded loans to buy unaffordable houses, extract cash out of their primary residences, or to flip houses for a quick profit. Most borrowers have responsibly played by the rules and continue to do so. It was the reckless ones that created this tragedy that has destroyed the financial markets. Some of these reckless few claim to have been hoodwinked by their lender, but where was their responsibility in the process? If all the bad loans were analyzed, there is no doubt a common thread of borrower irresponsibility or deception would appear in the overwhelming majority of them, provided an honest assessment was given.

This tragedy could have been stopped at any point in the mortgage chain. The mortgage lenders and brokers could have refused to participate, but they were more interested in the revenue generated. Wall Street could have stopped being a conduit pushing questionable securities to unsuspecting investors, but they did not care as long as the money was flowing. The rating agencies should have paid more attention analyzing the structures of mortgage securities instead of just collecting fees from Wall Street firms requesting the ratings. The investors could have performed some due diligence to understand what they were buying and reject questionable investments. Last, but not least, our Government could have paid attention and taken regulatory action when abuses were brought to their attention years ago.

We should be asking ourselves “what allowed this to exist?” Bottom line is that borrowers wanted to borrow money at any cost to satisfy their own purposes. The interest rates didn’t matter because of the prevailing belief that home values would always go up. Falsifying documents and borrower intentions became a sport that somehow became acceptable in pursuit of a loan. This continued until the party ended and home values started to plateau or slide back, suddenly defaults started skyrocketing. First payment defaults on newly originated loans quickly followed. It is hard to believe that good intentions existed when a borrower accepted money at a closing and did not make the first payment just weeks away. This makes it difficult to view this as anything other than simply fraud. Moreover, upon a first payment default, the loan servicers usually found it extremely difficult to reach the borrower because they often supplied incorrect contact information to remain inaccessible.

It is much too easy for citizens and politicians to point a finger at companies because they are faceless entities that can be easily vilified. It’s not so easy for people to point at themselves, and politicians have difficulty pointing at potential voters they depend upon for election. The marketplace is washing out the entities that provided the product, what should happen to the deceptive and irresponsible borrowers that demanded the same for their own gain, the exact ones the Government seems so eager to rescue?