In 1960, somebody wanted to buy the house, so they went to the Second Savings Bank of Berkeley ("Two branches to serve you!") and asked for a mortgage. The banker knew Hearst Ave, and could find the house, and knew the applicant, who had banked there a while. The banker hired a known appraiser to verify the value of the house. After checking the applicant's credit, they took 20% down and granted a mortgage, which they kept in portfolio.

In 1980, someone else bought the house. They went to Big East Bay S&L ("Branches from Richmond to Walnut Creek!"), who had a vague idea of the area and could find Hearst Ave. on a map, and who hired an appraisal firm to send somebody to verify the value of the house. After checking the applicant's credit, they took 10% down, required Private Mortgage Insurance, and granted a mortgage, which they sold to Fannie Mae. Fannie Mae in turn bundled a bunch of mortgages and sold them to investors. BEBS&L stayed on to service the loan.

In 2000, somebody else bought the house. They went to National Mortgage Chain, whose managers had heard of Berkeley, and who hired an appraisal firm to validate the value of the house. They let the applicant have a "no doc" loan with 5% down. They bundled a bunch of these and sold them on the securities market, and hired a servicer.

In 2004, the homeowner refinanced. The market was up so he took out equity and got a 90% loan on the estimated new value. He went to Jose the Mortgage Broker who wrote a subprime 4% 3/1 with 6/2 caps no-doc loan with a big commission for himself. The mortgage company he turned it over to hired an appraiser who was more than a bit generous in estimating the value. The mortgage company ("we've heard of California") bundled the loan and sold it to an investment bank, who mixed it up with other bundles and sold pieces of them on the securities market. The buyers of securities arranged credit default swaps from a hedge fund. The hedge fund sold the CDS ten times over. The security holders bought CDSs on five times the portfolio value, figuring that a default would trigger "The Producers"-like profits. The homeowner then defaulted when the rate reset up from 4% to 10%. But the CDSs were backed up only by other worthless CDSs. Bialistock and Bloom got caught. But they asked for a bailout, citing the old maxim, "if I owe you a thousand dollars, I have a problem; if I owe you a billion dollars, you have a problem." So all that's left to argue over is the size of their golden parachute.