“Moral hazard” sounds dramatic, but most of the time it’s not malicious.

It’s a simple reality:

When the people making decisions don’t bear the full cost of the downside, the decision-making changes.

If a broker gets paid at closing, their economic incentive is the closing.
If a seller exits at closing, their risk ends at closing.
If a buyer is emotionally invested, their incentive is to make it happen.
If a lender is focused on volume and relationships, pressure creeps in.

Nobody has to be dishonest.

The system can still produce bad outcomes.

That’s what makes moral hazard so dangerous: it doesn’t require bad people.

It just requires momentum and misaligned incentives.

Discipline is the only counterweight.