"Officials at the Department of Housing and Urban Development (HUD) point out that there is no uniformity in how loan documents spell out the terms of loans, and some are woefully inadequate. The Times also reported that 'many lenders peddled the most abusive and costly loans to unsophisticated, first-time home buyers. Known as 'affordability products,' the mortgages generated big commissions up front and were designed to require refinancing later on - which included yet another round of luscious fees for lenders. With refinancing no longer an option, it is becoming obvious that these loans were designed to fail.' Madigan told NPR, 'I have had hundreds of people come to our office once they realized that they were in one of these high-cost subprime loans… telling us that they did, in fact, ask 'Is this a fixed-rate loan?' They were told yes, only to find out two or three years later it was an adjustable rate loan. I've had people tell us, you know, 'we told them that our income was only $2,000 a month…' [But] we find when we look at the documents it was written down [by the lender] as $7,000, $9,000 a month. So people were being put into loans in spite of the fact that they were… giving the correct information. And it is all because of the fact that the brokers and the lenders were receiving incentives, in large part because there was just this demand on Wall Street for these mortgage-backed securities."
"Nobody seemed to care because of who was profiting, on the one hand, and who was being exploited on the other," Jackson said. "But now the water is - like the Titanic - the water is up around the deck where the big people hang out. But where did the water come in? The water came in at the bottom of the ship. The poor always pay more for less - for cars, goods and services, insurance, food, banking money. This time, however, it's affecting the whole economy, that's what is different about this. Again, if the government had not allowed the rich to get richer at the expense of the vulnerable you wouldn't have this crisis."
It is now estimated that 2.2 million subprime home loans have already failed or will end in foreclosure - the highest foreclosure rate since the Depression - with a total equity loss of $164 billion. Moreover, neighboring homes to foreclosed properties will see a decline in value of $200 billion. A US Conference of Mayors Report estimates that the foreclosure crisis will reduce home values by an additional $519 billion in 2008, bringing the total forecast of lost equity for the nation's homeowners to $1.2 trillion.