"If you could fog a mirror, they'd give you a mortgage."
We've heard some version of that quip over and over again. In years past, lenders happily fulfilled the dreams of eager borrowers, sight unseen. Income unseen. Assets unseen. Washington Mutual, now part of JPMorgan Chase
Without question, such mindless lending pushed the housing boom into crazy territory. In his recent book, CNBC's David Faber interviewed a mortgage lender who succinctly stated, "Fully documenting the borrowers' income could have stopped it [the crisis]. If I had said to you, the borrower, 'Fully document your income or you won't get this loan,' it would have ended."
Seems reasonable enough. And common sense tells you that banks, learning their lesson, would have buried such ridiculous lending standards six feet under.
You'd be wrong.
In an article discussing how Bank of America
Wonderful. One year after meltdown, we're back to the days when little things like, you know, facts, are beside the point. Don't have your paperwork? Can't prove you're a worthy borrower? Your name's Bernie Madoff? Don't worry about it. Take the money and run, dear homeowner. We'll worry about the consequences later, when someone else is in charge.
Why are such boneheaded moves prevailing? It's no secret: Most of the loans eligible for modification are already backed by Fannie Mae
We all knew folly in financial markets would make a comeback someday. But so soon?
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