You should research what the predatory loans were during the crisis. Your assumptions are incorrect, especially during the years leading up to 2008/2009. Banks

You should research what the predatory loans were during the crisis. Your assumptions are incorrect, especially during the years leading up to 2008/2009. Banks would get people who undoubtably didn't deserve loans, would handwave over the details and then send people on their way with $1M loans and the borrowers would later fail. I have a friend who worked at Washington Mutual at the time, and she would routinely reject loan applications, and her manager would overrule her. The manager was making $30,000/month in commissions from loan origination, and he didn't give a fuck who was getting the loans because he was being paid and they were getting packaged up and sold to Fannie Mae/Freddie Mac. Meanwhile, people would be getting loans that they couldn't afford, but could make payments because of the 0% interest loans that were actually increasing the principal. But they didn't realize this because the lenders didn't explain all the details to them. It's predatory to take advantage of the fact that most regular people don't have a higher-level understanding of mortgages, and by filling their heads with ideas that it doesn't matter anyway because they will sell the house in a year for a profit. The lenders didn't care because they were incentivized to originate loans even if they knew the borrowers couldn't ultimately afford them. The thought at the time was "the house price will increase in 2 years anyway, so even if you get a $800k loan on a $1M house, you can sell it in 1 year for $1.2M, and then use the $200,000 profit for a downpayment on a real home."