Lender Troubles

Quick post -

This article in the LA Times discusses that there is much less walking away then previously reported - In mortgage meltdown, 'walkaway' homeowners may be suburban myth. Here are the two key paragraphs -

"So many of the loans made were irresponsible -- for the borrowers and for the lenders," said Kurt Eggert, an expert on predatory lending at Chapman University Law School in Orange County. "Lenders have an interest in painting themselves as responsible, even caring entities. They want to cast blame for the sub-prime meltdown as much as possible on their borrowers."

It is generally agreed that the real culprit in the meltdown is the proliferation of exotic mortgages that hit borrowers -- many with paltry down payments and therefore almost no equity in the home -- with huge payment shocks in the early years of the loan. The new payments are often raised to levels that the borrowers could never have afforded but expected to escape via a refinancing or a sale of the house into a rising market.

In summary - the lender philosophy was blame the borrow and house value keep rising.