How did the mortgage crisis happen and whos to blame?
For a period of time, the market grew. It grew too fast. It had a big adjustment and a period of big dislocation came in the summer, and now we are in a period of volatility and uncertainty. One day it looks good, the next day it looks bad, the third day is a little better, so two days down, two days up. The market is looking to find a new level. And by the market, I mean home prices, housing starts and mortgage rates. Is it in anybody’s interest to see this amount of dislocation? No, I really don’t think so. Rates were low for a long period of time. Home prices accelerated for a long period. Both lenders and borrowers had a huge amount of confidence that ultimately led to overconfidence. The lack of other things to invest in caused people to invest in real estate, and a lot of the products, and I think it’s specifically pronounced in California, were designed to get monthly payments down at the beginning. The artificial depression of prices in the beginning causes them to adjust in th
