Sound Off: What lessons came out of the 2008 housing crisis, or, what bad habits still exist?
A: By 2008, lax credit practices allowed borrowers to take loans without proving that they had the income, assets and credit to pay their mortgages.
Additionally, teaser rate loans and optional payment plans made it difficult for some borrowers to anticipate — let alone pay — future increases in mortgage payments. This was a house of cards waiting to collapse.
Since 2008, stricter lending regulations have been passed to improve the quality of new loans. Borrowers are thoroughly scrutinized for their ability to repay loans.
Disclosures were expanded to make buyers better informed. Homeowners have changed their behaviors too, investing for the long-term and not expecting quick profits from selling. They have stopped thinking of their homes as sources of ready cash.
There are a higher percentage of all-cash purchases, (roughly 30 percent of San Francisco’s sales transactions). Fewer loans are defaulting as a result and short sales are seldom seen in San Francisco.
One thing that has not changed: We have not made banks accountable for their bad decisions. Those banks are “too big to fail” and they know that if they suffer huge losses, the government will bail them out to avoid a ripple effect in the economy.