Posted on 03/10/2007 4:34:57 PM PST by Bluestateredman
As we speak, NY-Times reporters and editors are on their knees praying that subprime mortgage defaults rise and rise, leading the US into a depression which they can then blame on GWB.
It is one of the few times the NY-Times has believed in prayer.
(Dear God, I'm sorry for my cynicism but sometimes I cant help myself.)
What they really need to do is demand higher down payments, and spot-checking appraisals for reality
And another not so publicized account has the major brokerage houses have near credit ratings closer to junk than the top rating.
"No body forced anybody to take these mortgages or to buy interests inthe secureties."
There's a phrase that has escaped from our society: "Caveat Emptor".
Our society wants to have no responsibility for any of their decisions and be completely insulated from any loss.
If I may add....
Some lenders have been doing SISA loans, stated income, stated assets and funding 100% through a 90-10 or 80-20. So, very little documentation from the borrower and 100% loan to value. And some FICO scores below 680. When the borrowers defaulted and the prices dipped the lender ate it. I don't relish the problem, but the lenders set themselves up. And many loan officers are just in it for the one transaction.
We provide full dislosure to the lender. I remember one where the account executive said send the loan over and maybe the underwriter will approve it. We told the borrower we didn't want to do the loan because it was obvious he would be in foreclosure in 4-5 months.
BTW, some lenders go back and analyze early defaults and can come back against the loan officer for the commission. The lender in our example, said don't worry about it, they would eat it if the underwriter approved the laon. Sounds like some have eaten too much.
I imagine the worst of the lenders will be facing jail time for fraud. And in the case of New Century, bankruptcy.
This has been predicted as imminent for several years. What is keeping the US economy and the world economy from instantaneous collapse?
A court has decided that it is defrauding the people of the US and the government to do loan fraud. Here was the scheme.
Buyer makes an offer for 50,000 over asking price. Appraisal verifies the higher amount, using phony comps. Lender makes the loan on the higher amount. Buyer gets 50,000 cash back from the seller.
The loan was based upon a phony appraisal.
We actually got a call like this on one of our listing. The agnet said she didn't know it was illegal and would talk to her client. She never called back. I think she was an FBI agent and testing the companies in our area. Fortunately, we gave the right answer, as we usually do : ). Before we got a license a few years ago, I never would have thought I was doing anything wrong as a seller, because I knew very little about how the system worked.
"This has been a disaster in the making for several years now, and it looks like the s*** may be about to hit the fan."
Blah, blah, blah, crisis, blah, blah, blah... sh!+ hitting the fan... maybe.
Do you guys ever run out of steam... I mean after 5 years do you guys ever stop? I bet you believe in aliens too.
I looked it up and got, "slice, a part of".
or the bear-ies some sideline investors have between their legs.
I believe in aliens. I live in socal. : )
Did you look it up in a French dictionary? FYI my source was an article some years ago in Barron's..
These "creative" loans only became popular in the last five years. I believe that we will begin seeing the dramatic fallout from them over the next couple of years. Ten years ago, banks still required large down payments and were not pursuing these types of loans, as they knew they were too risky. I firmly believe that the housing market will continue a downward spiral over the next couple years. There will be large scale defaults and a glut of housing on the market. As another poster said, think of the preponderance of ads touting 125% loans, no money down, no income verification, etc. That cannot stand in a declining market. For years now, people have been treating their homes as cash-producing instruments, readily refinancing every year or two as equity rose whenever they needed cash for home improvements, a new car, college education, etc. Despite the source of the article the facts remain. BTW, I have a 30 year fixed 5.25% mortgage that amounts to only about 30% of my home's current value. Personally not concerned.
"I believe that we will begin seeing the dramatic fallout from them over the next couple of years"
I believe you are wrong because I have faith in investor's decisions and the free market economy. You don't.
I firmly believe you have no idea what you are talking about by evidence that you use etc. way to much. Furthermore, you state "the facts remain" what facts? That you show how little you understand or that you use the same talking points the gold bugs have been using for the past 5 years? Nonsense.
Are you for real? I used etc. twice in a paragraph so I must be clueless? I am not a financial writer, I'm just stating the obvious from my own observances of people I know.
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