by Donna Burt

Created on: November 28, 2008   Last Updated: November 30, 2008

As someone who has spent over half their life working in the mortgage industry, it would seem pointing fingers in the blame of the current crisis would be an easy choice. It's not. In truth, every party involved has played a part in the spiraling decline and continued foreclosure market. My personal belief is to point the finger at greed.

Until early 2007 most Americans were not even aware there was a problem in the housing industry. To be honest, a lot of people employed in the industry itself were not aware there was a problem. We all watched the dream of home ownership climb, coupled with the cash in on record high equity for sellers dominate the market. Both buyer and seller were on a whirlwind.

The roots began in the mid 1990's, and did not stop. As interest rates decreased, equity increased and credit markets became more inventive, everyone took advantage. Prior to this, there were few opportunities for those considered "high risk" because of credit, income, job stability and iron clad mortgage guidelines initially set in stone. As technology was introduced the once "common sense" approach to lending, was replaced by what is known as automated underwriting.

First introduced by Fannie Mae and Freddie Mac, initially designed to assist loans considered low risk, automated underwriting used computer generated factors obtained primarily from credit reports along with income, assets and the amount of down payment to issue approvals or denial recommendations. If the loan was approved, the program also reduced the amount of documentation required for that approval. Henceforth, the beginning.

Over the next several years, automated underwriting became the norm for mortgage lending. As the economy continued to flourish, computerized lending soon became the tool dictating the majority of all mortgage approvals, including what was originally called "B Paper" now referred to as sub-prime. As investors realized there was an untapped source of borrowers, automated underwriting allowed once credit challenged or "outside the realm" applications to suddenly meet acceptable credit guidelines.

The result ended with riskier borrowers being approved. With an almost "anything goes" philosophy, lenders cashed in, investors were reaping higher returns and borrowers were able to purchase a home for either the first or repeat purchase, even if they had never paid their debts on time or previously had a home that had been foreclosed on. What was once "B paper" suddenly became the new

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