The formalities were all there, they were ignored. It was not a lack of regulation, it was over-regulation and unenforced regulation.
Why the fuck is a bank going to care if a loan can be repaid if the loan is going to be sold to F&F in a week?
How dumb do you have to be to think that there were no requirement standards that had to be met to generate loans? That there is no review process in place? Are you that dense? You think they just handed money out to anyone that wanted to buy a house prior to 2008?
Formalities existed to limit risk. F&F buying everything means no risk so no need to follow the formalities of making sure someone can pay back the loan. It's so fucking simple.