It isn't the one "black single mother," it's tha huge number of defaulters, 81% of them minorities, people who seemingly could not figure out that they did not have and could not reasonably anticipate having sufficient income to meet their loan obligations, and thus maintain their interest in the properties.
This flurry of activity was produced by enabling legislation that provided for issuance of loans without credit or income checks, and without the borrower having an equity interest in the property, legislation that mandated that loans be made to applicants who were unworthy credit risks, and fostered the euphoria by providing a market for these bad loans.
The initial coercion of the lenders to make loans, particularly to minorities, who were bad credit risks, proved unnecessary when markets for those loans developed with Fannie and Freddie buying and purchasing them, and selling them.
The scam occurred when these loans were purchased by institutional and private buyers, who were derelict in their duty and who profited initially from dealing with the paper. There were incentives inherent in the system which induced the frenzy of activity.
The provision of such huge amounts of capital into the market, escalated the cost of homes far in excess of what would be determined by utilizing traditional cost factors. The loan policies resuted in declining buyer equities, and when the residential property market slowed, the reduction in market price resulted in huge quantities of these properties having loans that exceeded value, with the owners having no equity. The prudent act was then to walk away from the property. There was no down payment anyway, so ...
Are the buyers to blame? Is there such a large component of mentally and/or emotionally incompetent people that there need to be stringent rules to prevent their participation in the market? Do the rules need to be amended so that without being able to acquire equity, and with denial of loans for uncreditworthy applicants, bad loans will not be made? Should Fannie and Freddie be eliminated since their availability to purchase worthless mortgages facilitated this debacle? The premises that housing inventory be distributed for nothing without the cost eventually being paid, is a leftist's dream, but not congruent with reality.
Were there fiduciarfy duties? The Wall Street operators, who either did not perform due diligence, or who largely probably did, and then proceeded to scam investors with misrepresentations concerning the quality of the paper in which they were dealing, should be called to task, and required to disgorge profits to people who were scammed as well as being subject to other penalties. Or were the people "scammed" willing participants in the deals, and essentially informed co-conspirators rather than victims, people who did not themselves at best, exercise their own due diligence.
