One of the more shocking moments (at least when you first heard it... It's not surprising anymore) of This American Life's hour long episode on the housing crisis, aired in 2008, was hearing about the "No Income, No Asset Verification" loans that were being made. They brought in a guy called Clarence Nathan who was given one of these loans. This is the transcript
And it turns out even the people who got them found them confusing. For example, a guy I met named Clarence Nathan. He worked three part-time, not very steady jobs, and made a total of $45,000 a year, roughly. He got himself into trouble and needed money. So he took out a loan against his house, a big one.
Clarence Nathan: Call it $540,000 for round figures.
Alex Blumberg: You basically borrowed $540,000 from the bank, and they didn't check your income?
Clarence Nathan: It's a no income verification loan. They don't call me up and say, how much money? They don't do that. I mean it's almost like you pass a guy in the street, and you say, will you lend me $540,000? He says, well what do you do? Hey, I got a job. OK.
It seems as if it's that casual, even though there are a lot of papers that get filled out and stuff flies all over with the faxes and the emails, and all like that. Essentially, that's the process.
Alex Blumberg: Would you have loaned you the money?
Clarence Nathan:+ I wouldn't have loaned me the money. And nobody that I know would have loaned me the money. I mean, I know guys who are criminals that wouldn't lend me that money, and they'd break your kneecaps. So [LAUGHING] yeah, I don't know why the bank did it. I'm serious. $540,000, a person with bad credit.