As has been stated in other wiki answers and the article "the current state of the mortgage market," the ratings agencies were a part of the problem.
As I have said before and will say again, the "mortgage meltdown" has no one cause. There are many actors in this tragedy.
The ratings agencies assign a value to securities that are backed by mortgages. Some believe the ratings agencies rated risky mortgages unrealistically high. The truth is, only a few very insightful nay-sayers actually foresaw just how volatile these securities would be.
Now that the writing is on the wall, it seems fashionable to hurl blame. The truth is that lenders first had to offer
risky loans before there would be investors to buy them before ratings agencies could rate them. And moving up the value chain consumers had to want the loans. Loan officers had to originate them. Underwriters had to assess the files. Appraisers had to generate the value. The list goes on. Whatever you take away, make sure you see the shades of gray.
Answer Submitted on Thu, Nov 15 2007
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