My recollections also

Wizbang writes,

"I have no grand unified theory that explains the collapse of the subprime mortgage industry, no overarching explanation for the events that led to the collapses that have shaken Wall Street to its very core this week (if that is what happened -- I'm not even up enough to know how much of the hysteria is hype), but I do recall certain things that seemed to me, at the time, bad ideas that would lead to major problems.

Many years ago, there was a huge push to approve a lot of mortgages that the banks had been refusing. There was a huge stink about "redlining," where banks were compelled to issue loans in areas they didn't wish to invest. And in the last couple of years, "creative" mortgages were all the craze -- especially the "no-documents" loans, where the applicants would just say how much money they made and the lenders would say "sure, we trust you!" " Full story here.

Yes, this is my recollection, although it wasn't "many years" ago. In 2004 we were helping our son look for a home he could afford on his income. We hadn't done much home buying since our primary home and our vacation home (1963, $14,000, 6.5% for 20 years mortgage; 1988, $52,000, 10.5% for 30 years mortgage), but we had a formula in mind--no more than 1/3 of his income should go toward housing and he ought to have some equity (which we'd planned to provide for him, just as my father had done for us). We found the "creative" financing available 4 years ago nothing short of stunning, and thought it looked risky. So we financed it ourselves and then he bought the home from us this past summer. The hoops he had to go through in 2008 compared to 2004 could have saved the country this mortgage and bank melt down.