@sideseatdriver - You are most certainly correct but I had an inside look at a class action suit involving a LARGE financial institution. This example is a look at a huge portion of the financial collapse of the housing market.
Once upon a time ______ Lending Company accounting finds that quarterly profits are down. The CEO from his ivory tower issues a new set of commands which threatens everybody's employment all the way down to the loan originator who is told they have to lend a specific dollar quota a month or start looking for new employment. John Doe, loan originator, is now panicked he could be in the soup line. In walks in J. Smith walks in and wants a home equity loan. Mr. Doe takes the credit app then sends out a third party appraiser for required appraisal. Mr. Doe get the appraisal back and finds that the value of the collateral is not enough to meet loan to value guidelines. In fear for his job Mr. Doe calls the appraiser and says YOU HAVE to relook at Mr. Smith's house - I need it to be valued at $75k more to make the loan. Now the appraiser is panicked because a huge portion of his business is dedicated to this lender. VOILA!! That $150k house is now (on paper) worth $225k. All is good now - Mr Smith happy, Mr Doe Happy, Supervisors HAPPY, CEO Happy, Stockholders Happy. Multiply this by thousands of loans and millions upon millions of dollars in loans. All is good until Mr. Smith gets laid off and can't pay - he can't sell the house because he owes more than it's worth. The lender doesn't want the house back because when they short sell it shows as a loss ultimately making stockholders UNHAPPY!! This was the housing crisis in a small nutshell. NOW?? WHO'S FAULT?? The originator or appraiser trying to keep a job, the supervisors pushing for more and more loans, the CEO that will claim he has no idea that type thing was going on. There is a lot of blame to go around everywhere on this issue including borrowers, lenders, and government!!
