This article from the Wall Street Journal  illustrates how the greed of many different industries and individuals was involved in creating the current housing crisis. It begins with a homeowner in Arizona who owned a distressed property and received a questionable loan, but the mistakes (at best) continue:

• Mortgage lender never saw the house
• Appraiser overvalues the property
• Lender collects over $9000 in fees and sells the loan to Wells Fargo
• Wells Fargo sells the loan to a firm in London which packages it with over $4000 other loans and issues the package as a security containing 85% sub-prime loans (meaning that 85% of the loans were made to borrowers with poor credit) 
• Credit rating firms Standard &Poor’s and Moody’s give the security a AAA rating
• Security is bought by many investors including a teachers retirement fund in Oklahoma
• Home is foreclosed on and is eventually sold for $15,000

Multiply this story by a couple million homes and you can see how things could have spiraled so far out of control.

Read the full article

blog by elephant’s realtor Liz Benson