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How We Got Here: Downpayments Were Nonsense, And Credit Scores Stood In The Way Of A Better Society

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People always say that hindsight is twenty-twenty but that gives the present moment too much credit. In fact, hindsight is usually just as myopic and cloudy as foresight or, well, uhm, just plain sight. Take the mortgage meltdown. Already it’s started to slip the minds of many just how loose things got in the hey day of the mortgage market.
No doc. Low doc. Stated income. All those commercials assuring us that bad credit shouldn’t stand in the way of the American dream, which apparently involved taking on massive amounts of debt to own a home in Florida or the suburbs of Las Vegas. We remember the words, the catch phrases, the scenes of happy couples in their new home. But it’s started to fade, hasn’t it?
Well, in the interest in memory preservation, we’ve decided to bring you the twenty-first issue of the twenty-seventh volume of National Mortgage News. On Monday, February 17, 2004, the National Mortgage News informed its readers that Angelo Mozilo wanted to eliminate downpayments on mortgages. Actually contributing equity to purchase a home is “nonsense,” Mozilo tells the News. He decries credit score requirements as too high.
“The only way we can have a better society,” Mozillo says, “is to make sure those who don’t have a house have the opportunity to get one.”
Welcome, ladies and gentlemen, to the better society.
Mozilo: End Downpayment Requirement [National Mortgage News; pdf]