I also want to add that I am not saying that there weren't really messed up, sleezy mortgage consultants who flat out committed pure fraud by telling people they were signing one thing when they were really signing another, but those are going to be few and far between and that's why you read what you're signing. I don't care if it's 30 pages long and boring as fuck. Read it. Know what you're signing. It's likely a promise to repay hundreds of thousands of dollars and you're not going to read it? Get out of here with that mess.

A majority of them were lenders who absolutely loved obtaining commissions and closing fees on their mortgages and got another couple thousand dollars any time they closed so yeah, they were looking for more people to lend to. But lets face it, poor people with less money and lower credit scores are going to be more risk, and therefore should pay more on their loans. The ARM's were perfect cause they looked great. A new 200K$ home for just 500$ a month? Sign me up! Now who isn't going to look at something like that and think "wait, this sounds way too good to be true. I should probably look into this more." I guarantee you warnings went off in a LOT of these people's heads but they ignored it because they liked what they saw and they wanted the immediate gratification. 

Also, I don't believe that they were sincerely targeting poor people as victims at all.  I believe that government and congress opened up a whole new market segment through the encouragement of providing loans to less qualified applicants and therefore banks saw a new market share that they could tap into.  Ideally, any business is going to want to provide their product to as many people as possible.  The banks could ignore the fact that these loans were a lot riskier because through legislation, they were being covered for the risk.  In a normal market, a bank would NEVER give a loan out to such an unqualified applicant because they would be liable for the loss when the borrower failed to pay.  Government, in their efforts to make the American dream more attainable and keep the housing market train steaming forward, removed the banks from the liability of such loans.  Stupid!  Anytime you remove someone from the liability and results of their actions you're going to end up with people acting unscrupulously.  The consequences are no longer there to keep them in check. 

Edited By: coboardgirl 11/15/2011 5:02 PM. Edited 1 times.