IOW, the bank should not have made a loan that they could very confidently predict would be defaulted on. But hey, they made the numbers for the month and now that loan is Freddie Mac's problem, right?
Mr Maize: the banks made low down payment loans for fees, not altruism. They made loans even once they knew the housing market was starting to collapse.
This crisis is a reflection on our society as a whole.
When our parents and grandparents warned us to avoid debt, many did not heed the warning.
I have been self employed for over 30 years, credit was virtually unavailable to me. So I learned to be prudent, paying cash, suffering from affluenza to this day. I feel sorry for those who promised their future for instant gratification now. But not sorry enough to sacrifice my own future. I believe in tough love. That which doesn’t kill you, makes you stronger.
He makes it sound so simple the poor banks but it’s not simple at all take for instance cases like this...
Ex-mortgage broker to plead guilty in Ponzi scheme
TAMPA - The victims were as old as 91 and their losses could add up to nearly $20 million.
Peter Bakowski, a 58-year-old former Tampa mortgage broker, has admitted orchestrating a Ponzi scheme that involved more than 30 investors and institutions and more than 150 deals, documents show.
Bakowski has agreed to plead guilty to a federal charge of making false statements to a financial institution, which carries up to 30 years in prison. He also faces a likely order to pay restitution to the victims.
According to his plea agreement, Bakowski sold mortgages to more than one investor at a time. The mortgages taken out by home buyers were sold by lending institutions to investors, who would assume the risks and benefit from the interest being paid.
Continue http://www2.tbo.com/content/2009/oct/26/ex-mortgage-broker-plead-guilty-ponzi-scheme/news-breaking/
Then this 80% of their loans defective...
Richard M. Bowen, former chief underwriter for Citigroup’s (nyse:C) consumer-lending group, said he warned his superiors of concerns that some types of loans in securities didn’t conform with representations and warranties in 2006 and 2007.
“In mid-2006, I discovered that over 60 percent of these mortgages purchased and sold were defective,” Bowen testified on April 7 before the Financial Crisis Inquiry Commission created by Congress. “Defective mortgages increased during 2007 to over 80 percent of production.”
The next scenario went on all over the country..
A loan for $360,000 went to a Chicago woman who supposedly earned $6,833 a month at an auto body shop. In truth she was a part-time housekeeper who was posing as the buyer to help her sister. The Countrywide loan officer not only knew these facts, she came up with the idea of having the borrower pretend to work at the auto body shop.
The lawsuit uncovered a raft of similar examples — case after case where the loan officers not only knew that fraud was being committed, but were actively engaged in committing it. “By about 2006,” says the lawsuit, “Countrywide’s internal risk assessors knew that in a substantial number of its stated-income loans — fully a third — borrowers overstated income by more than 50 percent.” And that is just one small subset of what went on at Countrywide. The truth is, any rock you turn over in the Countrywide subprime portfolio, something slimy is going to emerge.
In full http://www.nytimes.com/2010/10/23/business/23nocera.html?pagewanted=2&_r=3&partner=yahoofinance
Even the Fed!
Fed Wants Banks to Buy Back Some Bad Mortgages
Read this one it will detail how investor’s were sold bad goods. Oh and by the way many of us lost money that were in 401k’s/pension plans etc. as a result of these banks bad deals so we took a double hit the first being as a taxpayer on their losses.
http://www.nytimes.com/2010/10/20/business/20bond.html
Then there is Mers (here it shows you how states lost money and people who buy these homes in the future may not get a clear title if this is not all done properly)
What You Don’t Know about “Mortgagegate” Could Crush the U.S. Banking System
snippet..
In order to easily buy and sell mortgages between themselves so that these loans might be repackaged, securitized and then sold to investors as mortgage-backed securities, banks and other lenders needed a quick way to “trade” individual mortgages. They created a company called Mortgage Electronic Registration Systems (MERS). This group includes Bank of America Corp. (NYSE: BAC), GMAC LLC (NYSE: GMA), Wells Fargo & Co. (NYSE: WFC), Washington Mutual (now owned by JPMorgan Chase), the United Guaranty Corp. unit of American International Group Inc. (NYSE: AIG), Fannie Mae (OTC: FNMA), Freddie Mac (OTC: FMCC), mortgage-servicing companies and other similarly interested members.
You may not realize it, but at your home-purchase “closing,” you sign a document that appoints MERS as the “nominee” for the lender that granted you a mortgage. That gives the nominee the right to flip your mortgage to any other bank or lender it chooses. That’s how banks move mortgages around to package them into different securities.
But that brings us to the crux of the controversy: Every time there’s change on the title (a change occurs when the nominee switches the lender on your title out for another), local governments require that a new title be recorded. Of course, those governments - the county or municipality that you live in - also charge a “recording fee.” MERS also charges a fee, but it’s a lot less than government recording fees.
Here’s the problem. In creating MERS, these institutions actually changed the land-title system that this country - for much of its history - has relied upon to determine legal ownership status of land titleholders.
Not only did the lenders sidestep (read that to mean avoid) paying billions of dollars in fees to local governments, they paid themselves from the fees that MERS collected.
MERS is facing class-action lawsuits and civil racketeering suits around the country and their members are being individually named in all these suits. One suit alleges that MERS owes California a potential $60 billion to $120 billion in unpaid land-recording fees.
http://moneymorning.com/2010/10/15/mortgagegate/
It’s not simple at all notice who pushed that bill through D Leahy.
Why are people mad because we were forced to bail them out and lost Billions as taxpayers on AIG and Tarp, we have trillions of this bad crap that the banks sold to fannie/freddie as well and since they are GSE’s we the taxpayers are on the hook for that as well. Then as individuals who had money in Bonds for example whether it was through 401k’s or other pension plans or as a singular investment we lost as well.
If the bank’s hadn’t started Liar’s Loans to begin with we wouldn’t be facing these problems today. If the banks were allowed to fail like other capitalist business’s are allowed to do we wouldn’t be mad about being forced to bail them out. They socialized their losses but kept their privatized profits.
plus we know who they have in their pocket
http://www.noquarterusa.net/blog/2008/09/21/baracks-wall-street-problem-is-now-americas/
http://www.opensecrets.org/news/2009/07/jpmorgan-ceo-jamie-dimon-donat.html
http://pajamasmedia.com/blog/contributions-to-obama-campaign-track-bailout-money/
http://www.opensecrets.org/pres08/contrib.php?cycle=2008&cid=n00009638