2008/09,,, story of what happened changed from when it started to now.

.:.

End: man, non-judicial foreclosure, need no court to foreclose.

Low unemployment rate + low interest rates =

///

Exotic mortgage products, invented by the mortgage industry, and sold to people. Started in 92
or 93. Invented because they're high-earning, but backload costs for the future. Aggressively
marketed by lowering monthly payments. People didn't realize that they were transferring debt
discharge able in bankruptcy to debt secured by the value of their home. Boom in subprime
lending from 98-2003.

Nonbank sector is the main problem, through the magic of securitization. Nonbank institutions
have no heavy assets, so there's nothing to grab on to to fix it.

Problems:

1. Didn't see the risk. "Risk-based pricing" worked, they thought, if you were smart enough
about financial markets. Paternalistic to tell people they shouldn't have access to credit. Surely,
markets wouldn't lend if they didn't understand the risk, they thought.

"if we're going to lend to these people, we're going to have to check our morals at the door" -
Lehman memo

These loans were highly sold, with telephone operations, mail, door to door, etc. even affinity
marketing, as in churches.

.:.

American Bankers Association came out against the idea that the Community Reinvestment
Act.

Fannie Mae/Freddie Mac,

Almost all of this was refinance lending. Most of it wasn't first home ownership.

Exerbs are the main site of this, where lots of people were trying to build.

CRA applies only to depository institutions, not to exactly the companies that caused the
problem.