Columnist Mike Masterson of the Arkansas Democrat-Gazette wrote a great article about the current mortgage crisis and its roots. Below are a few excerpts. You can read the full story here.
I believe a former investigative reporter for Atlanta’s daily newspaper likely pitched the snowball that grew into the avalanche and buried our leading mortgage institutions. Bill Dedman in 1989 produced a series called "The Color of Money" that exposed the practice of redlining by banks that routinely declined risky home loans in low-income neighborhoods. Dedman wound up with a Pulitzer Prize and supporters for his cause within the federal bureaucracy.
“At the crisis’ core,” he wrote, “are loans that were made with virtually nonexistent underwriting—no verification of income or assets; little consideration of the applicant’s ability to make payments, no down payment....
...while head of Fannie Mae, “Clinton crony” Franklin Delano Raines was accused of “overstating earnings and shifting losses so he and other senior executives could earn big bonuses.... At the same time, the Clinton administration was pushing Fannie and her brother Freddie Mac to buy more mortgages from low-income households.”
Bill Dedman, the reporter who wrote "The Color Of Money" series of articles has posted a comment below. Mr. Dedman says his report was mischaracterized in the article that was referenced here. He offers a link where you can read the report for yourself.