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The Old Rules
At the heart of the US financial crisis is that many financial institutions are holding large numbers of “sub-prime” mortgages, and when home prices moved downward, they became worthless. In real talk, a sub-prime mortgage is one that was made to someone who couldn’t afford to pay it back. Yes, the banks were wrong to make so many of these marginal loans, but it takes two to tango, and the homeowners have to bear some responsibility for buying a house they couldn’t afford.
OK, I have to admit that when we bought our home we borrowed every penny the bank would lend us, and it is hard to criticize others for doing the same, but back then banks used sensible rules to decide what the limits were.