Originally Posted by kane

To me the housing crash was a perfect storm that came to shore. The fed and government created conditions that made money abundant and getting it easy.

The banks, mortgage brokers, developers etc, saw a chance to take advantage of these sub-primes and sell the hell out of them. Many of these banks (Washington Mutual being a perfect example) gave loans to people who they knew were going to default, but they didn't care. They just made the load then sold the loan.

Everyone upstream from the buyer bought, sold and bet on these mortgages and made a lot of money. Then when the buyers started defaulting the house of cards came down.

Of course the buyers have to assume some of the blame. They went out and purchased homes they knew they couldn't afford and assumed they could either sell them and cash in on the booming market or refinance them before the rate went up only to find out that their shitty credit score entitled them to their sub-prime mortgage, but it wasn't good enough to allow them to refinance and they also learned that they weren't the only ones wanting to sell so the market was flooded.

Realistically, had the housing bubble not happened we probably would have started slipping into the recession a couple of years earlier than we did. I also feel that had this housing bubble not happened the recession probably wouldn't have been as bad because it would have been a slower slide, not a sudden collapse.