A lesson to be learned from the subprime mortgage house of cards falling is that regulations meant to protect homeowners and communities were ignored.
Subprime mortgages are being blamed for the economic downturn.
Most local banks didn't get involved, but lenders from outside the region wrote high-risk mortgages throughout the region.
More than one in five home loans issued in the region in 2007 were subprime loans -- accounting for $518.6 million in total lending -- according to a Times analysis of federal Home Mortgage Disclosure Act records.
Subprime mortgages have been promoted as a way to increase home ownership, but a study by Valparaiso University law professor Alan White found more subprime foreclosures in recent years than subprime mortgages written for home purchases during the same period. Borrowers weren't buying homes, necessarily, but consolidating debt and betting their homes on the future.
"It was the magic money of the U.S. economy and masked what was really going on, which was rising expenses and declining wages," said Gerri Detweiler, a credit adviser with Credit.com.
That mask is no longer in place. Everyone knows now about how big banks got into trouble and were offered federal bailout money.
"What's being missed in all this is people are being harmed and have been harmed by the very institutions that are being bailed out," said Eric Weathersby, an organizer for ACORN Northwest Indiana.
Weathersby remembers one subprime lender, Option One, paying people to go door to door with leaflets advertising, "No down payment!" and "Bad credit? No problem!"
The problem, of course, is now apparent.
The result has been a wave of foreclosures and evictions, In some cases, homes that have been foreclosed are being damaged as a result of the utilities being shut off.
Water rises in basements, with no sump pumps operating, and the resulting damage hurts neighborhoods and communities even more.
The subprime mortgage situation must be dealt with so the problem doesn't occur again.
Consumer advocates and bankers agree that regulations applying to subprime lenders need to be enforced.
This meltdown must not happen again.
