[bluntfang]

sounds like they assessed the risk incorrectly or their risk tolerance didn't equal the actual risks they took. Isn't this normal? If I buy stock with all my money, and the stock dramatically lowers in price, I don't get to complain to the government and get free money, do I?

[leetcrew]

first of all, if lenders did the kind of DD you are talking about, it would preclude most ordinary w-2 employees ever getting a mortgage for a home. "they have only one source of income! they could lose it at any time!" these people are a much bigger risk than some landlord trying to get a mortgage for their nth rental property.

to answer your second question: if you, a private individual, bet all your money on investments that go belly up, you're just screwed. if you're a large financial institution, you get to argue that your going under would create rippling consequences that outweigh the erosion of moral hazard that comes with a bailout. it's not fair or reasonable, but it's reality.

[bluntfang]

>"they have only one source of income! they could lose it at any time!" these people are a much bigger risk than some landlord trying to get a mortgage for their nth rental property.

Fairly certain source of income isn't the only variable. What about rainy day fund? Aren't individuals encouraged to have 3-6 months worth of expenses in cash for emergencies? Shouldn't the lender assure that this is the case before lending?