Moving beyond money for nothing

At the end of the day the current credit meltdown can be tied to one thing: easy money.

Regardless of how many times we hear terms like "CDS," "CDOs," "synthetics," and all the other buzzwords of the high-finance world, it comes down to giving too many people too much credit -- credit that they didn't have a chance to repay once the housing market went sideways.

While there are many examples, the ever-popular option-ARM (adjustable-rate mortgage) -- particularly in areas like California, Las Vegas and Florida -- allowed people to buy homes at seven to 12 times their annual income by using negative amortization and a rising housing market to mask a dangerous gamble that the market would let them flip the house before they had to make a fully amortized payment.

All rights reserved. This content may not be used or reproduced in any manner whatsoever, in part or in whole, without written permission of Inman News. Use of this content without permission is a violation of federal copyright law.