Posted on 06/04/2007 10:24:49 AM PDT by 2banana
I can't post anything from Bloomberg.com. It is worth a click to read:
http://www.bloomberg.com/apps/news?pid=20601109&sid=a8VFwgtdQ9FM&refer=home
Total losers making $250,000 a year and driving exotic cars - while destroying people in the process.
There is more than one “Boiler Room” - which one are you referring to....love a good movie.
Got a link that works?
Never n=mind. Got it now. Sorry
Link works. But try this one: http://www.bloomberg.com/apps/news?pid=email_en&refer=home&sid=a8VFwgtdQ9FM
“Among other allegations, the plaintiff, Mae Jackson of Memphis, claims she was never informed about the terms of the loan, including the amount, the interest rate or the closing costs. In her complaint, she attacks NovaStar’s practice of using mortgage brokers who employ ``deceptive high-pressure tactics to foist these unfair and discriminatory subprime loans onto unsuspecting minority borrowers.’’
... In a separate statement, NovaStar says that contrary to the plaintiff’s portrayal of herself as naive, Jackson was a ``real estate investor who owned five properties at the same time.’’ Neither she nor her attorneys have provided any evidence of discrimination, NovaStar says. Jackson couldn’t be reached for comment.”
It's difficult to make any scam work without "marks" with a little larceny in their hearts.
This has to be one of the most competitive industries I’ve ever seen. Yet commissions on loans seem to stay high, especially in sub-prime.
Basically, banks have been speculating in RE, by lending money with a high probability of default. They’ve been cultivating brokers in minority communities and a few brokers have made a bundle.
With all the disclosure, its hard to figure that these folks were “exploited”, they got into beatiful houses, on the gamble that everything would work so they could stay in. Just didn’t work for some of them.
Wasn’t there a big story like this in the early 1990’s on 60 Minutes? I don’t remember too much about it just my brother-in-law griping that 60 Minutes was being too one sided.
I can almost see the logo of the mortage company but not quite.
Anyway from what I remember it was about mortages being bought up by this one company and then people losing their property when they defaulted on the loan and 60 Minutes was trying to pin the blame on the mortage company.
Like W. C. Fields said, “You can’t cheat an honest man. He has to have larceny in his heart in the first place.”
The real danger here isn’t to the idiots who bought more than they could afford, but to the bond markets and investors who were scammed by some of the biggest names in the business. Those loans were backed by bonds. When the borrowers default, the bonds don’t get paid back, and our 401k’s and investments suffer. As the article points out, the US bond market is poised to lose $75 billion as securities backed by these subprime mortgages fold. GMAC has seen a 90% loss in profits over the past year, UBS shut its Capital Management subsidiary after posting a $123 million dollar loss. They’re predicting up to a 60% slide in the subprime market this year, which will pummel both the profitability of the major investment firms that issue them, and the bonds that underwrite those loans.
This isn’t just about Joe Badcredit losing his $500,000 oceanfront home anymore, but about a looming financial crisis that stands to seriously hurt a lot of people who invested wisely and never bought into the hype.
Ha! that's a good one. If you ever manage to find an oceanfront home for $500K, rest assured, it's about to fall into the surf and cannot be rebuilt. Rebuildable oceanfront lots start at twice that.
Remember those kids games like Hot Potato or Duck-duck-goose.
The mortgage backed securities traders are just like that.
They package up a bunch of supprime junk, wrap the investment with some lower risk products to make it look better, and then sell it to financial institutions or foreign investors and hope a majority of the junk inside the MBS doesn’t go into default before the grace period where if a certain amount goes into default, they have to buy the security back.
Its just passing bad loans around and around and around till hopefully someone else is caught holding the bag.
Duck-Duck-GOOSE!!!! (goose being the person caught holding a bunch of loans in default)
You can find oceanfront homes in Florida for 500K. Only expect to pay 5 times the normal amount of homeowners insurance each year which is why they continue to be priced soo affordably.
Do you mean an actual, free-standing, single family house on the beach? Even with the usurious homeowners insurance rates in FL, it still might work as a rental. A 3 br 2 ba oceanfront goes for at least $2000 a week in high season, in NC.
Depends on where you’re looking. CA and the Georgia/Carolina coast? New England? Of course you’re not going to find anything. You can still get oceanfront lots for that amount (and less) in a few of the southern states, and most of the Pacific northwest (they’re pretty common once you get out of commute range north of San Francisco, clear up to Seattle).
All depends on what you’re looking for :)
Humboldt County is about as far north as I could take it, too chilly the rest of the way for this southern baby, lol. Humboldt’s full of granolas and tree-huggers, too. Fun to party with, but wouldn’t want them to have any authority over my property rights.
My other observation is that the $75B is probably the entire value of the loans, not all of which are in second priority position. Since the collateral value of the property (albeit in a depressed market) is not zero, this loss may be overstated. Perhaps it's as low as 40% after liquidation costs. That'll hurt, but it's not the same as writing off the entire balance, and I be that's what the know nothings at the wire services are assuming.
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