1. The borrowers must be verified by the banks and their agents as qualified.
2. Lenders must fill out paperwork accurately and make sure that when the home’s title changes hands, so does the documentation.
But in the past two decades, a whole lot of the time, that never happened.
For banks and servicers, the motive was money. Banks profited by packaging and selling those toxic home loans. Then they profited again by betting against those same securities. A bet, in essence, that a fraudulent loan wouldn’t be paid back.