by Nanci Arvizu

Created on: November 05, 2008   Last Updated: February 10, 2009

The Housing Bubble and Credit Crisis was not caused by the "Poor", but in fact, just the opposite. Our current crisis was caused by the greed of the rich, the up and coming, and by those who really should have known better but allowed their common sense to fly out the window at the promise of bigger paychecks every month.

As the prices of homes climbed, the average home buyer along with those who would not have even been thinking of buying a home had prices not risen so quickly, started to panic thinking that if they didn't buy a home now, they would never be able to afford to do it later.

Realtors and Mortgage Agents, Appraisers, Lenders and Brokers, fed on this fear. It started with the Realtor feeding the ego of the buyer, then leading them to their mortgage agents who would inflate figures, giving buyers more income and assets on their credit applications that they really made, then putting them into loan products that looked good for the first few months or even the first few years of the loan, giving the buyer the false confidence that they could afford a home that was way out of their price range. The Appraiser would bring in the value by pumping up any little thing they could, which in turn would help them down the road, when another house in the area went into escrow.

Then the Lenders would allow questionable applications slide by, even helping the mortgage agent by jumbling figures before sending the clients file and information on to the underwriters instead of verifying information, lowering the amount that the buyer could in fact qualify for, or rejecting the file all together.

The underwriters would then set their own morals aside and allow files to get processed and sent on to the next phase of approval, often times helping the agents by coaching them on how to make the loan scenario more believable. They knew how the next level wanted things to be put together, in order for the investors to want to buy the packages.

As each level of agent made more money, they themselves became investors in the housing market along with other large purchases. And when the rules began to change and it became harder to find true qualified buyers, the finagling in order to close the deal got completely out of hand.

Now, here we are, a year into the burst housing bubble, and we are all paying the price for the greed of an industry of people who we as home buyers and sellers hired to work for us and protect us from shady business practices. And unfortunately, as we are all experiencing, the housing industry has a huge effect on so many parts of what makes up our economy.

The way to prevent this in the future is to go after those who caused this. Banks should have to turn over their files for investigation to see which Realtors, Mortgage Agents and Brokers, Appraisers and Underwriters had the majority of their clients end up in foreclosure and then hold these individuals responsible with fines and possibe jail time for fraud. Most importantly their licenses need to be revoked without the possibility of being reinstated. By making an example of what will happen to you if, as a Real Estate Professional commit fraud or predatory actions in order to make your money, others in the industry will not allow this to happen again.

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