Default of conforming loans was partially caused by people who could afford to keep paying their mortgage deciding it wasn’t worth it because the value of thei

Default of conforming loans was partially caused by people who could afford to keep paying their mortgage deciding it wasn’t worth it because the value of their houses was so much less than their loan, they decided to do a strategic default. The prices of homes were inflated by investors overpaying for homes and non conforming loans that were not government backed. There were a lot of tricks that investors and home buyers could play. I was involved in investment real estate and had my first house built between 2001-2005. The first and easiest non conforming process that wasn’t government backed was to take out two mortgages - 90/10. I had a my first house built a 2500 square foot home and only put $1000 down. The cost at the time was $175K mortgage and the value of the house went up to $205K before the crash. It was also an interest only first mortgage. I refinanced it before the crash to get fixed interest rate and had a HELOC for $30K While one investment property I bought was 10% down, it also wasn’t government backed. The second investment property not only was done 100% financed because I knew people by then, it was also valued by a bank appointed appraiser at an unreasonable high price, I overpaid for it and the seller gave me cash back for the difference. I knew this was shady. But I later found out that this was illegal. They also took my word for it that I had enough income from my other investment property to cover the mortgage. By 2008, I was making $70K from work and had five mortgages totaling around half million. By late 2012, I walked away from all of them. The value of all three houses put together were worth $250K. Exactly three years after the last foreclosure to the day, I got approved for a mortgage of $335K FHA and had my house built - 3200 square foot 5 bedroom 3.5 bath in 2016 with 3.5% down and 3.5% interest rate. I just sold it last year for $670K The house I had built in 2003 and walked away from in 2012 just got back up in value to the price I paid for it in late 2018 and the price I refinanced it for in mid 2020. It sold for $270K last year. The bank bailouts were because banks were making a lot of risky non conforming non government back loans and as investors like me started walking away from houses, the economy crashed and people saw it made no sense to try to keep their homes, they walked away. > The banks were the ultimate underwriter of these mortgages and thus defaulters would impact the banks, then the banks would've been way more diligent and restrictive about loaning out the money Banks also lied about the credit worthiness of loans in their portfolio when they sold them off That’s just the thing, as soon as the banks made even non conforming non government back loans, they bundled them, lied about the credit worthiness of the loans and sold them off - mortgage backed securities. They weren’t ever at risk. The banks servicing the loans were not the original underwriters