Caymen,
Not to be argumentative, but let's consider what you are saying:
...or those that were selling the loan had a lick of respect for other people and avoided selling those loans
They did respect them. Regulations changed that allowed new mortgage vehicles to be introduced and lower qualifications resulted. The loan officers sold these new types of loans to people that met the new, lower qualifications. Disrespecting them would be not giving them the loans if they were qualified.
...of the appraisers that were appraising the houses for thousands more than they were worth
Appraisers make their appraisals by finding similar, representative homes that recently sold in the surrounding community and base their numbers on those factors using a complex set of average calculations. In our capitalistic society something is "worth" what someone is "willing to pay for it". So, at the time, the homes were worth that much as displayed by the fact that other comparison homes were selling for that same amount. That is what appraisals are. The reason housing prices were going up is because there were millions of new home buyers in the marketplace (due to the lower qualifications), and demand outstripped supply. It wasn't because appraisors did anything wrong. Heck, most appraising today is done by computer programs that mine sales data.
...or those in government that stood back and let it happen.
If you follow this closely it was government regulation that caused this to happen in the first place, with the root cause being the lowered qualifications for home ownership that led to new types of mortgages, a flood of buyers and a bubble in demand. Some in government saw bad times coming and cooking the books via Fannie and Freddie, but unfortunately our adversarial two-party system has our country all but gridlocked to fix anything.
What ever happened to businiss ethics and responsibly?
Nothing unethical was done here by business, other than Fannie and Freddie cooking their books once the sh!t started hitting the fan. That is bad, but the act of providing the loans to people that couldn't afford them wasn't unethical.
If anything it was the regulations that ultimately gave false-hope and a sense of entitlement to those that due to their low income level and/or spending habits previously would have never dreamed of home ownership. To me, that was the most unethical and heartless thing that could have been done.
A better question is whatever happened to "personal responsibility?" Or whatever happened to "not living beyond your means?" Or, whatever happened to "preparing for a rainy day?"
It's raining now. People bought homes assuming values would continue to grow for the next 30 years like they did the last 10 (speaking 18 months ago). Frankly, that's simply an unrealistic expectation.
TJR