Al - You are quite correct, CRA does not require banks to make bad loans. Problems arose with the various mortgage products that allowed people to qualify under the narrowest of margins. You stated that you had to make a downpayment. Some of these mortgage products did not even require proof of employment or income, much less a downpayment. Many started as low fixed rate loans that reset after a time to higher variable rate. The people that took these loans were the most vulnerable to changes in the market, but because these borrowers were in traditionally underserved minority groups lenders were able to boost their own CRA ratings. As I said earlier, not all these loans were backed by Fannie and Freddie, but politicians shortsightedly applauded any lending program that furthered home ownership and that's why these marginal lending programs thrived. The incidence of fraud involved is massive and relatively little has been said about that. Very sad.
