Who's to blame for foreclosure crisis?

I love this quote, Mr. Greenspan, chairman of the Federal Reserve for 18 years, said in a recent 60 Minutes interview that he "didn't really get" how subprime loans could wreak havoc on the economy until last year.

Regardless of who is at fault, the Fed is determined to keep this bubble moving. Now the 10/1 Fiat rate has been suspended to keep the lending increasing. So now the banks are generating funds out of a vacuum with no clear rules. The increased flow of monies will result in increasing inflation.

Regardless of who you blame, you and I will be paying the price. and the price will keep rising, as bad lending is official policy now.

Here is a snippet from the foreclosure article, click the link to see it in full.
Is it the guy with 70 houses? The cash-flow-happy mortgage brokers? Alan Greenspan? Yes, yes and yes.

By PAT BEALL

Palm Beach Post Commentary

Sunday, October 21, 2007

Michael Sichenzia has a problem. The former mortgage whiz who spent time in New York state's prison for mortgage fraud knows that bad home loans claimed some victims and fattened bank accounts for others.

But telling them apart isn't easy. "The thing we have the most difficulty doing nowadays is figuring out who has legitimately been taken advantage of, as opposed to who went into the transaction with their eyes open," says Mr. Sichenzia, now lead investigator for the Deerfield Beach law firm of Glinn Somera & Silva, which handles foreclosure cases.

That's because so many had something to gain from the mortgage bubble, says Bill Davis, president of Private Funding Specialists and past president of the Florida Association of Mortgage Brokers' Palm Beach County region — and many of those people went about their business winking and nodding. "It's everybody," he says. "The Federal Reserve participated, the big lenders played a part, the credit ratings agencies had a part, so did hedge funds and borrowers, appraisers."

The local results: In the six months ending July 1 of this year alone, more than $1 billion in mortgages defaulted in Palm Beach County and along the Treasure Coast. Not every borrower, though, was seeking shelter. And not everyone was duped into an onerous deal.

"I had a guy who called me who owns 70 homes," says Stuart broker Michael Morgan. "I know a lady who owns 16. It's the room of 1,000 doughnuts. How many can you eat? Two? Three? Well, how many houses can you live in?"

At the top of the market, though, home sales were all about cash flow. In 2005, a Point Manalapan home sold for $1.52 million in April, $1.82 million in June and was back on the block in August for $2.25 million.

Dozens of local borrowers now in default loaded up on risk by taking out two mortgages simultaneously: one for 80 percent of the home price and another for the remaining 20 percent. Fifty-eight of those piggy-back loans imploded within four months.

"People do need to take personal responsibility," says Ellen Schloemer, executive vice president of the Washington-based Center for Responsible Lending, a consumer advocacy group. "But I think people relied on their mortgage professionals to get them through it, when they probably should have thought of them as a used-car salesman."