Stupid question for you, we (the taxpayers) are only on the hook for the non-performing loans right? The non-performing quite a bit less than the amount stated or am I not understanding the full situation?
LLS
I’d say 1 out of every 10 loans originated over the past couple years are now either in forclosure, non-performing, or will be in the next year. Rate will probably end up higher. They were loans given to housing gamblers with no-collateral or ability to pay back the loan besides quick flipping. They were also HELOC loans originated so people could use their homes as a personal ATM. They were also loans given to grifters running mortgage fraud and rental schemes.
Then to spread the risk around, the original originators of the loans sold as much of the toxic waste as they could unload onto Fannie and Freddie or others. Loading them up with these trillions in high risk loans.
Now ofcourse the damage of all this could of been lessened if the fed and banking authorities had been doing their jobs. They could of clamped down on Frannie and Freddie standards. They could of done things like tell banks and thrifts they could not continue to book the potential profits from neg-am loans as actual revenue. But instead, they let the ponzi scheme continue. Bush was happy doing speeches about “ownership cultures”.
Now moral hazard is off the charts and we are no better than China or Russia. We are on the hook for everything. Get to work taxpayers.