An insider reports.(letters to the editor)(Letter to the editor)

Stan J. Liebowitz says that relaxed underwriting standards led to the housing bubble ("Anatomy of a Train Wreck," Oct. 20), and he is correct. I saw the change from within the industry: I worked for Herb and Marion Sandler's World Savings and Loan from 1994 to 1998. World Savings was the pioneer of so-called liar's loans (we called them "no income verification" loans).

These loans were not sold into the secondary market (Fannie and Freddie) because they did not fit underwriting guidelines, but nonetheless they were the highest-performing loans in World Savings's portfolio. The reason? In order for World Savings to agree to a loan without income verification, the borrower had to meet other criteria that were very strict.

The borrower's credit had to be excellent. A credit score was not used--the underwriters looked at all the details on the credit reports. When assessing the value ...