Who is to blame for the housing and mortgage markets undoing depends on who you ask. Consumers blame everyone, brokers blame banks, banks blame brokers, appraisers are in the cross-hairs, even real estate professionals are not immune to the finger pointing...I think Michael Jackson had something to do with it all, but I can't prove that.
We need to blame someone, so I ask the echo chamber: Who were the architects and engineers that created and enabled all of 'this'? Before I answer, lets use the drug trade for my first analogy.
Who are the real criminals in the illicit drug trade? The users, the street level pushers, or the cartels who manufacture and make the drugs available aka The Enablers? One could make legitimate arguments that all are to fault for varying degrees. If users didn't use, pushers couldn't push and manufacturers would be out of business cause there is no demand for the product...yet that's more tail wagging the dog. IMHO thou who enables is at the root of fault.
In theory, if the enablers didn't produce the illicit product in the first place, there would be no pusher or user. The banks and other institutions who engineered the easy to acquire, downright addictive financial products framed an environment where unchecked growth dominated, deceit was rewarded and ethical business practitioners were punished.
Follow me into more analogymnastics...What is uncontrolled growth called in the human body? Cancer. Without an internal system of checks and balances and proper detection techniques cancer manifests silently, usually until its too late when the organism has been consumed, ravaged to (near) death. You picking up what I'm putting down? Mortgage industry hell bent on growth until it consumed itself and imploded *pffft*
How is cancer treated? Traditionally with chemotherapy- an indiscriminate, very thoughtless killer of all things living. Wipe everything out and hopefully the body regenerates enough good cells to recuperate. This is effectively what's happening to the mortgage industry- important aspects have been or are being primed for indiscriminate eradication. As nonsensical as mortgage qualification standards were just over a year ago, so are the proposed 'fixes' being introduced via legislation.
Self-medication is a bad idea, thus charging the same people who architected the demise of entire institutions with implementing a cure is a bad idea, mmmkay? Medicine has evolved by studying and understanding what makes organisms tick on very (very) micro levels- further, how small thoughtful changes in the right places can cause substantial improvements. Business, industry as a whole, needs to adopt similar methodologies of implementing micro-evolutionary change rather than blow it all away, Bruce Willis-Die Hard style.
What is currently being proposed by law makers as solutions to the mortgage mess is incestuous at best. These changes are couched as 'protective measures for the consumer', which is a bunch of bullshit, seeing that the new Home Value Code of Conduct (HVCC) and H.R. 1728's proposal to ban Yield Spread Premiums serve to do nothing of the sort. Instead they will (try to) eliminate the mortgage broker, compromise the real estate professional and ultimately harm the consumer...all for the banks gain.
Think that our policy makers in Washington wouldn't let such things happen? Think again...after all, they've invested heavily in these institutions that are 'too big to fail'.