Locked Out of Homeownership (from the San Diego Business Journal)

The mortgages were ascertained for risk and comingled with larger bundles of mortgages, then sold to investors all over the world. These mortgage-backed securities found plenty of investors, and for good reasons.

“They were relatively secure because they were backed by people’s homes, and in a good economy, they continued to appreciate in value,” said Charlene Davidson, an investment banker with Costa Mesa-based McGladrey Capital Markets. “There was a huge demand.”

Another factor that helped pump up the housing market was the banks’ expansion of their client base to include more low-income borrowers. Thanks to changes in regulations approved by Congress in 1999, banks pushed loans to borrowers who formerly wouldn’t have been able to qualify.

“Not only did they relax the standards, you could say they eliminated them,” Davidson said. “Honestly, anybody could get a loan.”