On A Claire Day by Carla Ventresca and Henry Beckett for June 04, 2016

NOT defending banks here….I do think they were quite implicated in this crisis..

They lent money to unqualified borrowers…allowed tiny down payments. low interest, and high balances, without using due diligence or restraint.

And yeah, that flow of easy loan money did support rising prices, and unreasonable valuations.

But to call it win-win…. NO!The banks didn’t OWN the houses, or sell them, or take them “back.” The previous owners got the down payments, not the banks.The banks PAID the rest of the sales price on behalf of the new buyers…in the hope that those buyers would eventually pay them back with interest.Even then, the banks held mortgages and deeds of trust…. NOT property.It’s when they foreclose that they take title to the actual property…they don’t want to, but it’s their agreed upon recourse for default.Sometimes they’d paid twice what they could recover after the crash.(Unless they could hold it till values go up… but banking depends upon turning money…not tying up their assets waiting for inflation.)Say they lent $500,000 to unqualified buyers….it was handed to the previous owners, in the name of the buyers, who then took title.The bank’s interest was secured by a deed of trust… NOT ownership.Suddenly the economy tanked, the buyers lost their jobs and couldn’t make the payments…they walked away.Yes, the bank forecloses, and becomes the owner of the house…but now it’s only worth $250,000…Where is their “win?”They can’t chase down the original owners and make them give the money back.A lot of banks went under.That’s NOT win-win.Then again….. they were often victims of their own carelessness and greed …so it’s hard to have sympathy…