The housing collapse and mortgage meltdown were caused by loose lending standards that allowed people to take out loans without verifying income, employment, or creditworthiness. Low interest rates fueled demand and further inflated home prices. Both borrowers and lenders were greedy, as many took out loans they couldn't repay in order to speculate on further home price appreciation. Risky subprime and option ARM loans, in particular, caused the most problems due to their volatile terms. In contrast, VA hybrid loans maintained stable underwriting standards and did not contribute to the crash.

1. What Really Caused the Housing
Collapse and Mortgage Meltdown?
Here is a hint, it was definitely NOT VA Hybrid Arms.

2. sample photo slide

3. What caused the Housing Crash?
• We are going to stick to the facts
• Loose borrowing/lending standards
• Cheap money/low interest rates
• Greed by both Wall Street and Main
Street (that is you and I)
• Subprime Loans
• Option ARM loans (the furthest thing from
a VA hybrid loan possible)

4. What was the state of mind 25
yrs or so ago?
• When our parents were buying homes things were way
different
• You had to have no less than 20% down payment to
get into a home
• You were not entitled to a home, but you saved and
saved and earned the privilege to buy a home
• You bought a small house within your means and then
tried to move up later
• You tried to borrow as little as possible and tried to pay
your home off as soon as you could
• You got one type of loan. Everyone had the same
rules and loan types

5. Current state of mind (at least
prior to the housing crash)
• Here is what we and our kids are likely to think
• No money down loans are expected and the way
to go
• I live in America and owning a home is a right or
entitlement
• We want to keep up with the Jones’
• Who cares how much my loan is as long as I can
afford the monthly payment
• There is a loan for us all. We can always find a
way to get approved

6. Borrowing standards got way too
loose or easy
• Credit scores did not matter any longer. You
could get a $1,000,000 loan with a credit
score of 520
• Employment was not important or even
verified many times
• You could make up how much money you
made/earned
• Banks did not care what your home was worth
and were willing to lend 125% of your home’s
appraised value
• Down payments were a thing of the past

7. How does loose lending affect
housing?
• As more and more people bought homes prices
went higher and higher
• As prices went higher and higher people
borrowed more and more
• Prices then went higher still (due to easy loans)
• Fake home appreciation due to artificially inflated
home prices
• Most importantly people that had no business
buying or ability to repay the loan or intention even
in repaying it were now all able to purchase
homes

8. How does cheap money or low
interest rates affect us?
• On top of loose mortgage guidelines we had very low
interest rates
• Low rates was like adding gas to an already burning
fire
• Low rates allowed you to buy even bigger home or pay
higher prices due to such low rates making payments
so much lower
• When we first saw signs of the falling
housing/mortgage market our government slashed
rates even further to try and prop us up
• Most importantly people that had no business buying or
ability to repay the loan or intention even in repaying it
were now all able to purchase homes

9. Greed is good, right?
• Most of the greed came from Wall Street
• Wall Street knew they were selling or offering loans that had
little to no chance of survival, but they were making so much
money they did not care
• Wall Street was just like Madoff. These loans were a deck of
cards or ponzi just waiting to fall
• We all gobbled it up! Most of knew we were buying more
than we could afford and we did not care, it was fun and you
could not lose.
• Lots of people knowingly lied on loan applications and
thought they could sell the house for a gain and win
• TV shows were popping up everywhere teaching us how to
be more greedy

10. What really caused the CRASH?
• Short answer and true – ALL LOANS
other than VA
• FHA loans – No down payment required,
credit score did not matter. FHA
increased the loan limits they would
allow to keep up with the Greed wave
• Conventional loans- By now we all know
how bad Fannie and Freddie turned out
during the crash. Some conventional
loans were ok with no down payment, no
income, no proof of job and very low
credit scores

11. What really caused the CRASH?
• Subprime Loans were the worst
• Credit score was pointless
• BK one day ago, who cares
• Not employed, hey we don’t care
• Not a US citizen? Ok by us!

12. Option Arm Loans - HORRIBLE
• Not as loose on the standards as Subprime
• You could make a payment that did not even cover
your interest and it caused your balance to go up each
month
• Imagine making payments each month all while going
farther and farther into debt
• It did not matter as long as the house would be worth
more tomorrow. The house was like an ATM machine
• Very volatile index for the rate to be tied to
• The margin was as high as 5% or more

13. VA Hybrid Arm Loan
• Do your research after watching this video
• Youtube.com/LowVARates
• Google “VA Hbyrid Truth” look for
www.vahybridtruth.com
• VA Hybrid has NEVER ALLOWED:
• NO verification of credit history
• NO verification of job or income
• You to buy more than you can afford

14. VA Hybrid Arm Loan
• The VA Hybrid Arm is:
• Tied to a stable US treasury index
• Has low margins under 2.0% in some
cases
• Pays down your principal and is fully
amortized. Can pay down faster than
a 30 yr fixed too

15. What did you learn?
• The VA hybrid did NOT cause the
housing crisis
• Feelings are not right or wrong, they
just are
• You are able to make an educated
decision now that you have learned
the truth
• What really caused the housing crash

16. "I would like to my representative for
his outstanding commitment to
ensure my loan process. Thanks you
for all your hard work. God bless!"
-Larry D.

17. Thank you for watching.