Originally Posted by ASU2003

I think the main problem was that a small group of people bought 5 or 6 homes they had no intention of ever living in. They just wanted to ride the wave up, but were able to walk away if things went south. It was these people who were qualified financially to buy these homes with zero down, yet they were never planning on making the payments. That is why Miami, Phoenix, & Vegas were hit hard.

Fannie & Freddie I am guessing were ways to prevent banks from charging 14% interest because there was no incentive for private banks to really 'compete' against each other.