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It is pretty well established that the housing market crash was the event that precipitated the financial system collapse and recession we are now struggling through. That’s not to say there weren’t scores of other causes, but the drop in housing prices, which turned into a death-spiral, is roughly equivalent to the assassination of Grand Duke Franz Ferdinand in Sarajevo in 1914, which set off a succession of events that turned into World War I.
I heard on the radio the other day an interview with Clarence Nathan, a man who could be a poster child for the housing and mortgage crisis, except he is refreshingly short on self-pity http://www.onpointradio.org/2009/06/planet-money. Earning $45,000 a year, he had borrowed $540,000 in what was called a “no-income verification loan,” popularly termed a liar’s loan. In Mr. Nathan’s own words, “I wouldn’t have loaned me the money and nobody I know would have loaned me the money. I know guys who are criminals that wouldn’t have loaned me the money, and they break your kneecaps. I don’t know why the bank did it…loaning $540,000 to someone with bad credit.” [click to continue…]
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