Regardless of how bad Fannie May & Freddie Mack totally screwed up the Financial Industry - anyone who has remained employed throughout the financial crisis and still lost their homes to foreclosure must take responsibility for the fact that they purchased a house that they couldn't afford to pay for. True that Mortgage Companies failed to change their approval Income & Debt ratio's to take into account Government sponsored Inflation of 1). Local Property Taxes, & Utility Company rate increases which were much higher than wage increases. True that they also didn't take into account the fact that people now have Monthly Cell phone bills and Monthly Cable TV & Internet Bills that they didn't used to have. That doesn't change the fact that you have to be able to know how to budget your future expenses BEFORE you buy in order to know IF you can afford to buy!     

JZC - You have pinpointed the true root of the problem: Mortgage originators were willing to give practically everyone with a pulse a loan because they knew that they were going to sell the loan to someone else, therefore they wouldn't be left "holding  the bag" if the loan went bad.  They were simply after the mortgage origination & closing fees.  Then pass the toxic loan onto some other sucker stupid enough to buy it.

If it were illegal to re-sell a mortgage this problem wouldn't have happened.  You can bet that people wouldn't be willing to lend their money to someone unlikely to pay it back.  But if it's someone elses money, then they'll lend all day long.

You're example points out to me that you were irresponsible and immoral.  When the mortgage originator told you to deposit $5k from a relative into your account to make it look like you had the money to qualify, you could have said no.  And therein lies the rest of the problem - you went aloong with it because you wanted that house bad even though you didn't have the money available at that time.  Just because the bank made an immoral suggestion doesn't mean you had to do it.  Two wrongs don't make a right.  You're argument is that the banks are unscrupulous therefore you have the right to be unscrupulous.

You should be the poster child for the problem.  No one has a "right" to things they can't afford.

How about all of the greedy people who borrowed and couldn't make the payments or chose to strategically default because their property value dropped below their mortgage balance?

Just because the banks were selling rope, didn't mean that mortgage borrowers should buy the rope and place it around their necks.  Borrowers took a gamble and lost.  I'm tired of people lambasting the banks.  No one held a gun to borrowers' heads and forced them to sign the mortgage documents & now because things turned against them, they go out and hire attorneys to get them out of paying their mortgages on technicalities.

How about not buying things that you can't afford or blaming others when a gamble turns against you?

What goes arond comes around.  BOA & WF (through their subprime subsidiaries) have been allied with Freddie & Fannie to rip off the taxpayers for years.  Why should they not pay dearly for their roles in destroying America.  This is the first time I have said "Way to go Obama"

JZC -

Yeah, "The BANK that loaned me the 20% HELOC on a home that I didn't own, only wanted to see the $5k in my checking to show that I could access cash if needed".  You had no cash by your own admission.  It was tied up in your other house which you hadn't sold yet.  So, you entered into an agreement to buy another house without any means of paying it at that time.  That is unscrupulous & you are a dirt bag.

You said, "there is nothing set in stone that says they have to or that it's immoral to purchase a home without a down payment if the banks are willing to do so".  Wrong again.  If the bank gives you a gun and some bullets, do you put it to your head and pull the trigger?  I think not.  There is something called discipline and common sense of which you have neither.

Yes, I think it is wrong to purchase a house if you cannot even put down 20%.  Why do you think lenders make buyers who put down less than 20% pay mortgage insurance (PMI)?  It is a fact that people who put down less than 20% are more likely to default.

"Where is that written in the Bible"? - everywhere.  People were greedy. 

You say that the banks were in on the whole thing - no, the banks were simply giving people what they wanted.  People that play with fire get burned - don't blame the matches, dude.

You're the type of person who would sue McDonald's if you spilled a cup of their hot coffee on yourself even though it says on the cup, "Warning, hot coffee, risk of burns.  Caliente."

to wingnut42:   You're right, the banks are a charity because people want to borrow money from them and not pay it back.  You're right - the banks are to blame just like McDonald's is to blame when people spill hot coffee on themselves and Smith & Wesson is to blame when someone gets shot and the tobacco companies are to blame when someone gets cancer from smoking cigarettes.

The banks didn't set home prices - the market (people) did.  The banks are in the business of lending money for a fee and that's what they did.  What happens to that money after it is lent is out of their control.  They did not create the problem - the borrowers did.  It's like the theme song from the old tv series Baretta said: "Don't do the crime if you can't do the time".