by Calculated Risk on 2/26/2007 12:26:00 PM

"Loose lending would be more correctly stated as no lending standards."
Jeff Lazerson, president of Mortgage Grader in Laguna Niguel, Feb 26, 2007

From the O.C. Register: Insider Q&A on home lending pitfalls

Q. Lets talk about loose underwriting standards. How big of an impact has loose lending had on home prices in Orange County?

A. "Loose lending would be more correctly stated as no lending standards. I would say that in Orange County and across the country prices have gone up, I would estimate 50 percent more than they should have, just because of no standards in underwriting and lending … Anyone could purchase a property as long as they could manipulate through the paperwork.”

I don't know if half of the recent price increases were due to "no lending standards", but I do agree that speculation, using non-traditional loans, played an important part in the price boom. I also agree with Lazerson on defaults:

"We haven’t seen anything yet with defaults. It’s going to get a lot worse before it gets better.”