It happened. I tried to warn my then friend that he was taking a big risk but I was more or less told to mind my own business. I have a couple of relatives who made the same mistakes years earlier so I saw the consequences of “living for today and screw tomorrow.”

After he lost the house and his wife later left him, we had several conversations where he expressed regret for not taking my advice at the time. He even starting drinking heavily and had to seek out professional for his depression. I don’t drink and don’t enjoy the company of people who do so we parted ways three years ago last month.

All to true. The low interest rates coupled with the CRA led to the eventual housing bust.

For what it’s worth, it reminds of the Savings & Loans fiasco in the late 80s. Entire new neighborhoods of new housing were built in the Palmdale area that never got sold and was eventually razed for a lack of buyers. It looked like a ghost town or more appropriately, ghost neighborhoods.

The Construction companies and the banks all got bailed out via the then RTC at tax payers expense. When will we learn, WHEN will we learn?

You forgot to add the primary cause that inflated the housing bubble to begin with: the Community Redevelopment act. It all but did away with mortgage lending standards and forced banks and lending institutions to make mortgage loans to people who would’ve never qualified for a home loan under normal circumstances.

I personally know a couple who bought a $650k home with a $10k down payment. Their combined income was approximately $85k/year. They took out a 2nd on the mortgage a few years later to buy an expensive BMW and took a month long vacation in Europe. They were living large and didn’t think it would end in the way it did.

They ran into trouble in 2005 when the balloon payment came due and their monthly mortgage payment doubled. My friend started working a part time job to make ends meet in a valiant effort to keep his home and he and his wife maxed out their credit cards during that time.

But when his wife got laid off from her job in 2006, well, the end came 6 months later when their home went into foreclosure. They were one of the many who tossed the keys into the mailbox and walked away. Their credit was all shot to hell so it didn’t make any difference to them.

The sad part of it all is that they blamed everyone else but themselves for what happened to them. When the blame Bush mantra came along, they fell right in line.