AND THE PREDATION WOULDN'T HAVE MATTERED MUCH...::

[I]t's just a matter of historical record that many, many borrowers were either financially unsophisticated and taken advantage of or actively defrauded. And defrauded borrowers were no exception to the rule. Broker and lender fraud was an epidemic.

And it wasn't even a newfangled thing. It was the third or so subprime push in fifteen years--one that happened to be supercharged by Wall Street innovation unmoored from any sense of propriety and--unlike the previous flare-ups--unchecked by any real regulation.

This is from the Financial Crisis Inquiry Commission's report:

But many borrowers do not understand the most basic aspects of their mortgage. A study by two Federal Reserve economists estimated at least 38% of borrowers with adjustable-rate mortgages did not understand how much their interest rates could reset at one time, and more than half underestimated how high their rates could reach over the years. The same lack of awareness extended to other terms of the loan--for example, the level of documentation provided to the lender.

Subprime mortgage brokers, to put it very mildly, were not known for their morals or ethics, and these . Ninety percent of appraisers surveyed in 2006 said they were pressured to artificially inflate home values, mostly by mortgage brokers.

Countrywide dangled serious monetary incentives in front of its brokers to put borrowers in subprime loans even when they qualified for better mortgages. That was because Countrywide itself made twice or three times the profit margin on subprime as it did on prime. New Century paid its brokers a 2 percentage point cut if they were able to put borrowers in loans 1.25 percent higher than its listed rates.

New Century went bust in 2007, but Countrywide (now part of Bank of America) settled predatory lending lawsuits for $8.4 billion a year and a half later. That settlement covered 400,000 borrowers.

Wells Fargo coughed up $175 million for predatory loans to 30,000 minority borrowers. Countrywide settled another lawsuit for $335 million covering 15,000 minority borrowers. Then there was the $26 billion settlement reached with JPMorgan Chase, Wells Fargo, Ally Financial, Bank of America, and Citigroup for egregious foreclosure abuses.

Follow @brothersjudd