How did this happen? Here's how.

Well, here's my little piece of the past week's financial meltdown.

A couple of year's ago, my wife and I took out a second mortgage on our house. It made sense financially.

But when we applied for the second mortgage, the guy on the other end of the phone essentially got it approved without ever having an appraisal done. Our part of Erie County has some relatively low real estate prices (at least for 95-year-old houses that could use some work), but he pushed it through at about 30 percent more than we felt it was worth.

The thought seemed to be, "well, that's so low, we can just add another $40,000 onto the value. ... Oh, and would you like some more money? Maybe another $10,000 or $20,000 to spend on whatever you want."

We didn't. And no balloon payments either, thank God. But is it any wonder that companies like Countrywide are on the brink? What I'm wondering now is if the company that owns the mortgage goes under, what happens to the people who have mortgages with that company who are still paying faithfully every month?

Meanwhile, a whole economy was built on that kind of loans. See Michael Greenberger's explanation on Terry Gross' "Fresh Air" on NPR if you want to start to understand it all.