housing bubble

Pre-2000, to buy a house standards were harder ie 25% down, steady job, good credit rating b/c bank wanted money back. Then mortgage broker Eg. CFC got into business and had less incentive to make sure mortgagee's would pay them back. This was b/c they take say 100o mortgagee's , bundle them and sell them to investment banks Eg. bear stearns who would bundle an even larger amt. and sell them to investors. The investors like the returns b/c they were high and were SAFE according to rating agencies like Moody or s and p. These ratings agencies gave them a AAA b/c when house prices were going up, noone was defaulting. There was no negative feedback b/c everyone was benefitting. Home owners with no money, mortgage brokers, investment banks and investors.