Sorry if this was answered in your second link – I couldn’t open it. Who is the lender? It was probably one of those hot shot loan originators that immediately sold the loan to the derivative markets. As long as the derivative markets were buying up the loans, the originators had every incentive to approve these loans.
I don’t think it was a matter of stupdity, but greed. It doesn’t matter if the market was tanking, as long as there was a buyer for the loan on the other end.
