It's easy to look back now and criticize but when the FHLMC mortgage rules were changed the economy was booming and there was an assumption that a buyer's income would increase over time so that a loan they were not qualified for under the old standards would be paid- and that even if it wasn't- the value of the house would increase so the increased market value would cover any loss of default. No-one foresaw the dive in the economy that happen after 2000- or the fact that real-estate speculators would go around buying homes just to "flip" them for higher prices. This was happening like crazy down here- and ofcourse realtors- who make their commission based on the selling price had every reason to inflate prices as high as possible. The real-estate market was just insane here- nearly every day I got offers in my mailbox to buy my house and/or the adjoining land even though I had never listed it and had no intention of selling. But that's was how eager speculators were for real-estate to "flip".