In a nutshell, lenders would give loans to just about anything that breathed, in fact, according to federal guidelines that were imposed on Lending instituions, they were directed to accept welfare and unemployment checks as income for loan qualifications and a LACK of credit or POOR credit was not to be used as criteria to turn down an applicant. So, lenders would bundle all these loans ( pretty much knowing they would default) and sell them off to Fanny Mae and Freddie Mac who were, what?.....a Government backed or packed ( as in Herb Moses Fannie Maes former president with Barney Franks) mortgage holders who all along said they were Garuuuuunteed by the Fed., well they weren't but they are now.
Well now we have the mess that WE all have to pay for. This is the product of Socialised Banking, and some in Congress, re: alot who want to be re-elected, are wanting these scofflaws to be bailed out and supported by US, even more, some are saying they want to continue the same practices because Diversified housing is such a good thing. People like you and me who work hard and pay our bills and mortgages are getting screwed.
I remember when applying for a mortgage was like living through the Spanish Inquisition, many a night wondering if we would get accepted, the same went when buying a new car, not as intense but still a sense of wondering if you were going to get denied or a higher interest rate.
Sorry, it was a bigger NUTSHELL than I thought.