Alright staff. I am under investigation by the SEC. Our stocks are down big time. All those toxic loans we made over the last few years are going bad. Our share holders and the media is on my a$$ big time. I know, let’s go skiing!
Another fabulous idea from Angelo Mozilo and the Countrywide camp. What the hell are these idiots thinking? Who ever is in charge of marketing and public relations at Countrywide should be fired because they suck, BIG TIME!
Countrywide Financial, the besieged mortgage lender, has canceled a gathering of bankers from smaller mortgage banks at the Ritz-Carlton Bachelor Gulch ski resort (where room rates begin at $725), Countrywide said in a statement on Sunday.
The company was to pay for 30 invited guests’ hotel rooms, meals, skiing and tips.
In the statement, the company said that “in light of recent events” it had decided to cancel all gatherings with business partners and clients for the rest of the year, moving quickly after being criticized for planning such an extravagant event.
This just shows the “true” character of this company. What a disgrace.
No Responses
So Moe tell me that your surprised by this. Lepards dont generally change their spots.
I will not be satisfied untill the day that I see the “Tan Man” in a bright orage jumpsuit.
Yes i know that Im engaging in delusional thinking. but one can dream cant they.
The public should be inundating their lawmakers and state attorney generals with deluges of mail calling for the prosucution of this high livin flim flam con man.
Why oh why is this man not doing a perp walk?
Posted on February 26th, 2008 at 2:42 am
[...] Original post here [...]
Posted on February 27th, 2008 at 12:57 pm
“…\’e2\’80\’9cIt is both imprudent and unfair to approve mortgage loans that the borrowers cannot reasonably be expected to repay if housing prices were to fall,…\’e2\’80\’9d
This judge is an idiot. A homes appreciation has NO bearing on the borrowers obligation to repay his mtg.
I have no patience for “Feel Good” rulings from the Judiciary.
Posted on February 27th, 2008 at 1:41 pm
“A homes appreciation has NO bearing on the borrowers obligation to repay his mtg”
Christopher- I think that was just an excerpt. Think about this. Most of these ARM’s were fixed and borrowers were qualified at the start rate and not the reset rate. So, at resert they are screwed, unless they can refi into another loan.
Couple the fact that housing prices have fallen dramatically, people are “stuck” in these “defective” mortgages. So they cannot continue making payments and they are losing their homes. Thus, our country is getting slammed with unnecassary forclosures.
This is not rocket science here.
There are laws that protect consumers against unfair & deceptive business practices. Just an FYI, the whole damn real estate and mortgage industry was INCREDIBLY unfair and deceptive over the last 10 years.
Driven by greed and profits.
The way they sold these homes and these loans was akin to peddaling “snake oil” and that is exactly what this “smart” judge is basing the ruling on.
I have no patience for “profiting from selling the American people defective products” from corporate America.
Posted on February 27th, 2008 at 1:59 pm
Hey Christopher,
Where have you found new employment since you left Freemont. You know ….since they (Freemont)declared Bankruptcy (after not being able to get wall street money to fund any more toxic loans).
Get off your “high-horse” and realize the world is bigger than you and your perceived common sense. This is not a “feel good” ruling from an “idiot judge”. It is a responsible decision for THE PEOPLe of the state
Posted on February 27th, 2008 at 2:12 pm
ALL LOANS- PRIME/SUBPRIME/ALT-A must provide net tangible
benefits to borrowers. In addition borrowers must take ressponsibilty for their actions. A loan can never be approved
on a assumption of price appraciation. That assumption may
violate Federal Statues regarding fair lending practises
and prudent underwriting guidelines. The only way out is too
reduce the rate on the mortgages and collect the interest to keep
loan current. Lending guidelines were throw out the window during
the boom henceforth the lenders were guilty of very poor underwriting guidelines.Finally all loans must pass a reasonability test as to borrowers ability to repay the loan.-flv
Posted on February 27th, 2008 at 2:36 pm
So, for the 90-day period the good state officials
will be doing what exactly (negotiating?) on the part of
their constituents, will someone be holding the
escrow for the mortgage payments made for the next
90 days?
Is the good judge running for re-election?
Posted on February 27th, 2008 at 2:39 pm
This judge is an idiot. He must be grandstanding and making a populist point to further his own self-interest.
It sounds like he has a problem with all adjustable rate mortgages, so why separate subprime from Alt A and Conventional financing?
Everyone that buys a home takes a chance on the value declining, as do the initial and end lenders. Why should the borrower be exempt from this risk?
The reality is most of these subprime borrowers would not have qualified for a fixed rate when they initiated their last loan. They typically need to have the lowest payment to pay off their outstanding debts so that they could continue to live outside of their financial means. That means a short term fixed rate and possibly an extended term or interest only program. Unfortunately, these borrowers will typically learn nothing and charge up their credit cards again and/or buy a new car they can’t afford. Then it’s time to shop for another mortgage to attempt to bail themselves out again. And then repeat.
Had the majority of these borrowers only had a fixed rate option, they would have been facing foreclosure over a staggered period of time rather than all at once as values have plummeted. If it wasn’t for the more creative programs, these borrowers would have lost their homes a few years ago.
This problem is not at all limited to subprime borrowers as so many political blowhards have fooled themselves into believing. The problem is most Americans live on the edge, beyond their means. They must have immediate self-gratification and BUY NOW. Have to impress the friends and neighbors with the over-sized lifestyle.
What ever happened to saving money and working your way up? Most Americans are addicted to credit and have become slaves to their creditors. That is the cold, hard truth.
Suprime, Alt A, Conventional - the only thing that separates most of them is a misleading credit score.
Where were these blow hard politicians when the refinancing boom was happening? The housing and mortgage industry pulled the US economy out of recession earlier this decade. They all thought it was great then. Spend, spend, spend.
They seem to be as stupid as the borrowers who claim they were taken advantage of - only after home prices are declining. Plead ignorance and expect a government hand out.
Posted on February 27th, 2008 at 2:55 pm
The judge is grandstanding. When these borrowers took these loans out they had the options of taking a 2 yr ARM or a 3 yr ARM, of a 30/15 Balloon or a 30 yr fixed. So the borrower had choices it sounds like the borrower’s when with the lowest initial payment. This was their choice, so they made a bad decision. These judges should analayze the borrowers spending habits, client comes in a does a debt consolidation every 2 to 3 years due to the fact that he can’t live within his own means. So that is the mortgage lenders fault too I suppose. People make bad decisions every day- look at the automobile industry- people are financing cars for 72 and 84 months, they total the car or trade it in in month 36 they now owe more than the car is worth. Who fault is that? People over spend every day, they need to be held accountable.
Posted on February 27th, 2008 at 3:26 pm
I applaud the judge and Coakley. People are losing their homes, children are being displaced and YES, they most likely got screwed by greedy brokers who appealed to the borrowers sense of greed. We are the professionals, we are licensed and duty bound to protect the client, not stuff our pockets.
The biggest thing everyone is afraid of is that there are still alot of scum bags looking for an excuse not to have to pay their mortgage and will use the crisis as an excuse to squat on their properties for nothing. There are so many people hurting, and sadly there is always one slime in the bucket who will make a dollar off this mess.
If banks can’t foreclose, then people will squat indefinately, then the real estate will lose value all together because,”why leave if it’s free?”, The delinquent homeowners will not opt for short sale if they think they can live there indefinately for nothing. Then the towns can’t collect taxes and such.
The real estate crisis is quickly looming into a depression if you ask me. Remember when nothing was worth anything?
Nothing in this world is free, and if the delinquent home owners aren’t refi’d to lower rates, given a pass on the back interest,(a fresh start so to speak), then we are all in trouble.
I know plenty of former mortgage professionals who are TRYING to get jobs at the local malls, just to buy food.
This isn’t over by a long shot!
Posted on February 27th, 2008 at 3:30 pm
Lets start asking if any of you actually read your mortgage documents? Why bother, they are too long and too complicated. That is the real problem.
People jumped on band wagons that the state legislatures demanded from banks in ‘03 so that everyone could enjoy home ownership. All the mortgage companies asked was make the payment. Now a few years later people who stated their incomes or went no doc to buy more house than they could afford are up the creek. Sorry.
What about all the people that didn’t? I pay my mortgage do I get a break? No, I get to pay more taxes! I should pay for the idiots who signed their notes and knew they couldn’t afford it.
You know the stories, guy buys big house with no money down, lives big, drives the benz and now can’t afford the house. Who picks up the tab? Tax payers, (that is why this story starts in Taxachusetts, they like living without responisbility there)
Wall St made money then and will make more with any bailout. The international investors have stopped by mortgages and are now buying our companies. Take a good look around. The politicians are going be certain that their friends and families are taken care of while the rest of us pay the bills.
ps Long Beach Mortgage started this ten long years ago. Offer people with bad credit a mortgage that they pay more for but… if they learn the lesson of their mistakes after 2-3 years their credit will have improved and they should be able to go conforming. That is the real story line. Consumers saw a way to realize the American Dream. Greedy consumers saw a way to buy too much house and sell it for a profit. Where are the speculators now?
pps yeah, the judge is an idiot. The few people who might have invested in mortgage backed securities are watching this and walking away. Freeze the FC process however long you want. There isn’t any money other than yours and mine to bail them out.
Posted on February 27th, 2008 at 3:39 pm
“Hey Christopher,
Where have you found new employment since you left Freemont. You know \’e2\’80\’a6.since they (Freemont)declared Bankruptcy (after not being able to get wall street money to fund any more toxic loans).
Get off your \’e2\’80\’9chigh-horse\’e2\’80\’9d and realize the world is bigger than you and your perceived common sense. This is not a \’e2\’80\’9cfeel good\’e2\’80\’9d ruling from an \’e2\’80\’9cidiot judge\’e2\’80\’9d. It is a responsible decision for THE PEOPLe of the state”..”"
I’ve never worked for Freemont. You must have me confused with someone else.
Posted on February 27th, 2008 at 4:17 pm
Irishchick,
My problem is that the judge “feels” that a borrower has no obligation to repay his/her mortgage IF the home begins to lose value. I’ll quote him again, “…unfair to approve mortgage loans that the borrowers cannot reasonably be expected to repay if housing prices were to fall,..”.
Posted on February 27th, 2008 at 4:24 pm
Of course this judge is an idiot. Her theory makes no sense. So what happens when the values go back up. Does the banks get to then recharge a person???? Again, you don’t go to Vegas, blow all your money and lose and demand it all back from the pitboss. If you lack common sense and can not handle financial responsibility, it is not the rest of the peoples problem. They should not have to pay for people who blew through money.
Sorry John, if you feel so much for all of these people then you be lending a helping hand, because in the end we all pay for others mistakes and I personally know how to budget and have common sense.
Posted on February 27th, 2008 at 4:29 pm
Moe
Did the borrower not READ the loan documents? Were do we as a country draw the line in personal responsibility? How does a judge get off saying “It’s unfair”. Unfair to whom? I think it’s unfair that I might have to pay for a large federal bailout for people who bought too much house.
Posted on February 27th, 2008 at 4:30 pm
Christofer,
What is your point here. If home prices start to fall, yeah maybe so. But what statistics are you reading? Home prices haven fallen, they’ve PLUNGED! What incentive does someone have to pay on a loan that’s nearly twice what their property is valued at? I realize every place and situation is different, nonetheless, when was the last time the market behaved this way? California is the seventh largest economy in the world, all by its lonesome. This is a crisis, and I’m sorry if you bought a home here in the last 5 - 7 years there’s no amount of feel good you peddle to these folks.
My guess is you didn’t. If you owe about a cool million on your house and its now worth about $650k or so; then please offer your personal insight of how you deal with this and think its just. Otherwise, just make your point without the word games. Bottom line, financial institutions and the mortgage industry crafted this mess to line their pockets at the consumers expense. They had little risk as the loans were sold on Wall Street and cleared their books. Now they expect those that got duped to keep paying on inflated appraisals just to hold onto a FICO score. Once someone’s declared bankruptcy, the FICO score is out the window and at that point the judge is looking to do what’s best for the consumer and their creditors. How is continuing to collect from someone a house payment based on an inflated appraisal good for a consumer in bankruptcy? Please explain.
Posted on February 27th, 2008 at 4:37 pm
Since when is buying a home the same as going to Las Vegas and gambling?
Posted on February 27th, 2008 at 4:46 pm
Wouldn’t that just be the ultimate congame. If you can jack up the value of an asset, entice a bunch of folks to buy into the scam and then have them as indentured servants to you for the rest of their lives based on an asset value that was truly never worth its asking price to begin with. Crime doesn’t pay I guess that’s true, now its legal. Bravo!
Posted on February 27th, 2008 at 4:49 pm
Does anyone buy this load about not understanding the documents?
This is far from complicated - Jethro Bodean could master these concepts. Sure, there are a few exceptions but for the majority this is a truly pathetic excuse.
The broker sends disclosures, then the lender sends disclosures. Finally there are the loan documents - how many opportunities to review this does someone need? Refinances have a recission period that allow the borrower to back out of the transaction after reveiwing what they have signed. The borrower can actually ask questions during the process.
I think the vast majority of those claiming they didn’t understand the “complicated” paperwork knew exactly what they were signing. They all bought in - until their value dropped.
These borrowers need a lesson in fiscal responsibility.
Posted on February 27th, 2008 at 4:57 pm
For those of you who can’t seem to wrap your brains
around the specific point Christopher is attempting
to make: Let me put it this way. You see I am going
to go down to the luxury car dealership and do the
lowest down I can find on a lease or purchase for the
most expensive Mercedes I can find. I will also go
for the promo with the extended first payment too!
I will put gas in it and maybe check the oil but I will
drive hell out of it and ignore the payment book when
it arrives. I will continue to drive hell out of it
when I get the first reminder notice that I have not
made my payment. When the 2nd notice comes, I will
ignore it too and continue to drive that car. When
they finally get around to threatening reposession, I
will ignore that too and start hiding the car at night
but drive hell out of it all the day long. When it gets
to the point I know the repo man in on my scent, then
I am going to call my state legislators and ask them
to negotiate on my behalf for a better interest rate
and certainly a write-down of the principle and while
they are doing this for me for the next 90 days, guess
what, I am still not going to make any payments. Now
do you want to know why I am going to all of this.
Because I am an American, a sheeple, at the end of the
day the expensive luxury car didn’t make me happy, and
I am entitled. And why—because we all know the
car depreciated by at least 18% the day I drove it off
the lot! Can you wrap your brains around this?
Posted on February 27th, 2008 at 4:58 pm
Paul,
Totally agree, and so do the banks, Wall Street, bond insurers, MI companies and brokers. I imagine home sales will pick back up, but the incentives and SPIFF money from handling the transactions will be a little smaller in the future. You still can’t convince me to keep paying into this congame though. Nice try!
Posted on February 27th, 2008 at 5:02 pm
Oh, I can wrap my brain around that Louise. But you have to compare apples to apples - a home and a car are two different animals. I haven’t bought a new car since I was 19, why, exactly why you said. Too much depreciation. For those that love that new car smell, hey, they sell it in a bottle. I don’t want to hide my house, the bank can have it back. Still, no prudent points here yet. I can play this game for a while, but it will get old soon.
Posted on February 27th, 2008 at 5:05 pm
If a mortgage was “structurally unfair,” then let the borrower rescind the transaction. Rescission is basically a do-over, a turning back of the clock so it’s as if the transaction never happened. That means the bank gives back all the payments (principal and interest) it’s collected, and the borrower gives back the money it borrowed in the first place.
But that’s not what borrowers begging for help want. They don’t want simply to void the transaction; they want to keep the upside and be shielded from the downside. They want to keep the money they got from the lender, but not have to pay as agreed.
Posted on February 27th, 2008 at 5:06 pm
Thomas, and that may work for some - for me I would still be upside down and unable to get financing. Values have gone down that much in my neck of the woods. I’m not saying I don’t have any blame here, I do - I just think I don’t share 100% of the blame. There are many others like me, I know. This isn’t a good thing for any of us, but it is something we’ll have to face.
Good post, best yet even; that I’ve read but I don’t read them all so I apologize if I overlooked another.
Posted on February 27th, 2008 at 5:13 pm
This judge has dillusions of being a god, like most judges do. These people bought these homes gambling that they would continue to appreciate. If you go to vegas you dont get your money back if you loose. Let the chips fall where they may, people will loose their homes, butthats the chance they took. No one should provide a baiout at taxpayers expense.
Posted on February 27th, 2008 at 5:36 pm
When stocks plummet, do the purchased call the brokerage and scream unfair practices?? NO! Why is it when a borrower applies for a mortgage, signs all kinds of UPFRONT disclosures, and final disclosures at closing (with an attorney present to ask any questions they want) is it the lenders fault. I am getting really tired of people not taking any kind of responsibility for themselves. Let’s not forget that homeownership is a choice. If you can’t handle the payments upon reset, don’t buy the house. There is as much greed to get on the bandwagon from buyers (and people refinancing) as the lenders. When the market picks up again and some day it will, all these people same people who are screaming that they were too stupid to read, will say that the banks/lender/brokers are unfair to not have “affordable mortgages”.
Read the fine print, and for that matter the print is not so fine. Has anyone ever seen a TIL??? I can guarentee when they see the total amount financed, the borrowers call and question that right away, but they don’t look at the breakdown of the monthy payments?? Really stupid/
Posted on February 27th, 2008 at 5:38 pm
“They don\’e2\’80\’99t want simply to void the transaction; they want to keep the upside and be shielded from the downside. They want to keep the money they got from the lender, but not have to pay as agreed.”
Thomas on:
Check out a recent ruling in NY on January 28,2008, LaSalle bank V David Shearon. NY Slip Op 28032. They judge voided the mortgage, gave the borrower back all his payments and made LaSalle pay all the borrowers legal costs. The borrower counter sued for preditory lending, AND WON!
We the professionals, are being held responsible for this situation because we were paid to arrange these loans and in SEVERAL cases the borrowers greed was doing the talking and we were drooling for the commission. Now the borrower is hurting and blaming the professionals who arranged the closing.
Sure the judge commented about the value, and sure the borrower has some fault. The entire banking industry is to blame for passing out the booze at this party, not the minors who got drunk off it.
Posted on February 27th, 2008 at 5:40 pm
Good points are coming, I knew this would pick up. Yup, now we are comparing buying a home to buying stocks. Again, like gambling in Vegas, a much more riskier investment than most perceived buying a home to be. True, buying a home of late during the boom was about the equivalent of buying stocks, very risky indeed. How many folks new that was what they were doing though, I sure didn’t. Do know it now though. Note to self and others, that didn’t work out so well; now did it?
Posted on February 27th, 2008 at 5:52 pm
The point is that when you agree to pay a loan for a particular amount per month for a particular period, then that is what you have agreed to do. That the value of the home went down is beside the point. The owner gets the gain if the value goes up, and the lender does not share in that gain. If the value goes down, the owner, quite appropriately, gets the loss in value and the lender should not have to share in that loss.
What the judge (as well as you populist types writing here) don’t understand is that the popular efforts to try to save the homeowners from the loss in value IS GOING TO MAKE THE SITUATION WORSE! It is called the law of unintended consequences. Let me detail a few of the ways that come to mind.
These proposals amount to changing the loan provisions after the fact, in favor of the borrower. This kind of change will further discourage lenders from making any loans because they cannot trust that the borrowers will be held to the provisions of the loan. Lenders (or at least ones that expect to survive) will need to “over charge” to cover possible changes in the terms of the agreements in future years. This will kill the entire mortgage loan industry. Business grinds to a halt when the rule of law is not applied consistently. And killing the mortgage loan industry will decrease the demand for houses.
Here in California, if you have a first mortgage (only) that was used to pay for your home in which you live, you can turn “walk away” legally and turn your house over to your lending institution and you owe nothing. This “wonderful consumer protection” law is going to destroy the housing industry in this state. People who have plenty of income to pay their loans will simply walk away from them; why pay more than the person who buys a new house of the same size? This will place even more houses on the market. It will also further undermine the mortgage industry by reducing their income.
Typically, the changes being debated on the Federal level (by presidential candidates and the current president, for example) give relief only to those who are behind on their payments. If such a provision is passed, everyone will want to stay at least a little behind on their payments in order to be able to take advantage of such provisions. I presume that most of those reading this missive can understand that this will not be good news for the future of the mortgage industry, and thus bad news for anyone who will want to get a home mortgage in the future, and bad news for home prices. When the government pays people to be irresponsible, we end up with more people acting in irresponsible ways.
There ain’t no such thing as a free lunch. Any attempt to change the nature of existing mortgage contracts after the fact will result in disaster. You think home prices have plunged? Given the kinds of “fixes” that are being seriously considered, we can expect house prices to fall over 40% average nationwide. Or perhaps we can even reach for the 90% level that was achieved during the last depression.
Posted on February 27th, 2008 at 5:54 pm
Attn: Judge Ralph Gant
I’ll be in Las Vegas this weekend and was wondering if I lose a few thousand dollars can I claim my loses were unfairly gained by Casino allowing me to negoiate my losses?
Can you help me.
thanks
concerned gambler
Posted on February 27th, 2008 at 5:56 pm
I find it very funny that people think the government should bail out their bad investments. I am in banking, and wrote many loans over my past 15 years in the mortgage business. (mostly high credit borrowers). There were many borrowers with get rich, flipping, strawbuying, and defrauding lenders. I find it funny that this is all the lenders fault. The industry opened up homebuying to pretty much everyone. People chose to tell lenders regularly “get me in for the lowest payment”. or “I don’t care what it takes, get me into this house”. Nobody is taking their own responsibility for signing the docs! They can bring an atty to closing- most of those people didn’t CHOOSE to spend the money. Anyone who REFINANCED into one of these loans should be exempt from any assistance, they had a 3 day right of rescission to look over ppwk, etc. , have an atty do it, etc. They CHOSE not to! The opportunity was given for more people to become homeowners, they CHOSE what they were buying. With the internet, they could do research. Watching borrowers go to the “too good to be true” loans- well, usually in life, that is not a true deal! I believe this industry should be more regulated, but the buyer/borrower has the greater responsibility!
Posted on February 27th, 2008 at 5:57 pm
Not sure why it is perceived to be riskier buying a house to buying stocks. Stocks may be more volitile, but the housing market history does support downward trends on a pretty regular cycle.
If people never thought in the past 10 years that real esate would hit a downward cycle, as it has many times in the past, shame on them for not doing any homework. Any investment has risk. Housing is no different. If someone took out an option arm with a start rate of 1% and the going 30 year fixed is at 5.5%…common sense would be to question what gives. If you don’t understand the explaination before you sign that very large note, again, common sense would say you should.
Posted on February 27th, 2008 at 5:59 pm
Bill,
Good points, but foreclosure isn’t cheap either and left unchecked that’s where most of these loans will go. There is no simple answer. People trapped in these loans will have life events that force a change long before the “smoke and mirrors” equity returns to allow sale.
For example, young couple bought a condo have children, need more bedrooms, cannot move because they owe twice as much as the condo is worth so you end up with a family of five in a two bedroom. Obviously, there are many more scenarios here; divorce, job change, life events, job loss, health reasons, etc.
Like it or not, being able to sell eventually is a reasonapectation of homeownership. Wall Street failed to realize this when putting this scheme together. Most folks move every seven years on average, it will be much longer than seven years before the Ponzi scheme prices become the norm again. My guess is after the bottom hits we may be lucky enough to have values increase slightly behind inflation. Now, you never realy know with markets; but there is no quick fix for this mess. Foreclosures will suffer the same disaster for profits and loss - possibly even more than workouts and the bond insurers will hopefully be able to keep pace so the folks invested in this horse trade won’t lose their pensions. After all, that is the real thing here, the loan servicing companies are driving towards foreclosure so they can get their profits via their hedged bets in insurance claims. This is why they are reluctant to work out loans, if they foreclose they can cash the insurance checks and get more money now.
Much like you, I don’t really think there is a ‘fix’ but that doesn’t change the fact that we’ve created a real rut in our economy that won’t be easily overcome.
It’s unfortunate for us all, and not just the folks caught in the trap; whatever side of the fence they may find themselves to be cornered.
Posted on February 27th, 2008 at 6:09 pm
@ Irishchick and Tom
This is not the fault of mortgage professionals. Each and everyone of these borrowers is to blame. They all either bought homes they couldn’t afford or they used their homes as ATM’s to afford lavish lifestyles ( I live in Ornage County California. I see it everyday) Now the time has come to pay their agreed upon debt they want to claim ignorance. As a mortgage professional I ALWAYS told my borrowers it was all wasy smarter to take a 30 year fixed fully amortizing loan to guard against just such a calamity. Time and again I had borrowers ask for the shorter term loans. Many times I had bwrs that took 3/1 ARMS and 5/1 ARMS when a 30yr fixed was sometimes only 1/4 pt. more jsut to save $30 dollars a month. To echo what was mentioned earlier where does personal responsibility come into play? For our information I have been in the business for 8 yrs. and I have never written 1 Neg am loan. I have no sympathy for idiots that seek to use this as an excuse not to pay their obligations. To paraphrase the Godfather ” They’re animals anyway, Let them lose their homes!”
Posted on February 27th, 2008 at 6:12 pm
Don’t worry folks, I have been doing this for more than 2 decades. The public never learns because they chose the easiest road. The originators chose the easiest road, made a ton of money. Most of them never bothered to learn the tougher loans so when subprime died, they ended up on the foreclosure lists too. When the fog lifts, I hope that we will all learn something from it, but given our history, I doubt it. Fast money, Fast credit, is gambling in a sense.
In the old days you needed 20% down to buy a house. I remember people thinking I was nuts for recommending anything BUT a stated income, stated asset, 100% LTV on a 4 family investor. They didn’t care about whether the borrower paid it, because they could just flip it fast and make a cool profit. No more flipping, and everyone is crying foul. They will do again right after this mess is cleared up and some politician tries to take all the credit for stopping a depression. I have a headache, night yall.
Posted on February 27th, 2008 at 6:14 pm
Mark,
It may not be your fault, but it will certainly have effects and affects upon your industry and business. As a borrower, I know I have ‘fault’ in this mess and am willing to take my lumps, I just don’t think this situation falls into the business as usual category. That’s all I’m saying. I appreciate your insight and hope the best for you and your family.
Posted on February 27th, 2008 at 6:19 pm
Tom, let me help you. The congame scam of raising values artificially has happened, the banks got screwed, not the borrowers. Throw that arguement out. Next, why should you pay? you signed the NOTE saying you would? If you bought at the top of the market, too bad! House value should not be an issue. If you are purchasing a home to live there, it is not an INVESTMENT, it is a basic need for shelter, which may appreciate or depreciate. YOU should not be watching values, it is like a 401K (that is going down- do you pull out of it, NO, it is a long term investment). You take no responsibility for yourself. You are severely mistaken if you think the banks lined their pockets. The loss in the past year has been more than the profit of the 4 best years! I have 3 houses, 2 of which I bought in the past 2 years, my values have dropped, you take the loss now, or ride it out, this is cyclical! The people who bought mid to late 80’s lost in early 90’s and mid to late 90’s, far exceeded their profit. You signed the NOTE, you should pay!
Posted on February 27th, 2008 at 6:22 pm
Tom
Thanks. It’s funny for years I stressed to my colleagues and anyone who would listen that we were headed for this people laughed to my face. The most common response was ” This California more people move here than leave or die each year values will never come down.” Looking back I should have do the unscrupulos thing and sold bad loans. I would have made a ton of money. Whatever happens I can sleep at night it may be cold having no heat but my conscience is clear.
Posted on February 27th, 2008 at 6:24 pm
Certainly foreclosure is a disaster for the lending institution. So it is to their advantage to try to work something out if a borrower has a balloon payment situation. If they don’t write a new loan that the home owner can actually pay for, they are left holding the bag. I have no problem with this process. Lenders have to face reality if they are going to get through this thing.
What I do have a problem with is the government changing the rules. This will throw a monkey wrench into the process that will largely freeze the industry (don’t say it can’t happen; the commercial loan industry has already been frozen, doing only a very small percentage of the business it did a year ago).
I also have no problem with loan companies, brokers, loan officers, appraisers, and other players being held accountable in cases where they actually broke the law as it then existed. But holding people and companies accountable to standards that did not exist at the time is simply wrong, destructive to the housing and mortgage industries, and in violation of the letter and spirit of common law the the constitution. Especially since loan companies were being encouraged to make sub-prime loans in order to help out the poor.
Posted on February 27th, 2008 at 6:56 pm
Mary,
Perfect sense there. I have to move this summer, job transfer, never been late on mortgage. Will assume a huge financial loss in renting. Was planning on being in the loan for 5-7 years - have only lived here for four; historical average for asset realization on home ownership. This type of loss will not recover in that 5-7 years and this home will be a financial drain if I decide to hang on. As I’m moving and will no longer live in the home anyway; my choice is to eat the loss now as I only see it getting larger in the foreseeable future. So long as we agree it was a congame to begin with, I have no issues with anything that’s been said. What I do have issue with is being held 100% responsible for owing the full balance on the congame. If the bank will let me sign a promissory note on about half of the balance, interest free that’s a fair shake in my opinion. It’s certainly better than 7% on it for the next 26 years.
I know, this is just one man’s opinion. I don’t care if my credit report says I’m an idiot. I would be more of an idiot if I kept paying into this scam to lose more later - again only one man’s opinion. You can try to make rationalization of this, but it just ain’t rational - point of the story.
Posted on February 27th, 2008 at 7:13 pm
Moe,
Get facts to support your argument. What effect does house price appreciation or depreciation have on the ability of a borrower to repay his loan? House price apprecation/deprecation may determine a borrower’s ability to refinance, but never influences the ability of a borrower to repay loans. Your arguments are driven by emotion rather than reasoning. Try dogmatic.
Posted on February 27th, 2008 at 7:33 pm
Louise,
That by far has to be one of the worst analogies I have ever read. Don’t quit your day job.
Posted on February 27th, 2008 at 7:34 pm
Since most of thease loans involed fraud on the part of the mortgage broker or lender and fraudulent valuations done by crooked appraisers I am surprised it has taken this long for a judge to make a ruling like this. Most of these homeowners were scammed on these loans. Where was the regulation to protect the homeowners from these preditors.
Posted on February 27th, 2008 at 7:37 pm
I completely agree with the judge, but for a very different reason than previously described here. I think this has fantastic implications, albeit, not for the residents of Massoftwochetts. I, unfortunately, lived in the commonhell,err, commonwealth (sic) for too long! I can only imagine the impact upon businesses and commerce within this supercilious, dung hole of a state - and I revel in the coming end result - MISERY! Outside of hell (aka Mass.) NOBODY, repeat NOBODY will EVER want to do anything of import within this state again - the judge has sealed the fate of this liberal-fascist-communist state (liberalistm, fascism and communism are all the same thing). I would not even try to sell dung in Mass. - they may change the terms of their “purchase” after they had taken delivery - all with the blessing of some lib. judge! The only thing I ask of “geniuses” like Moe and “John Smith” is this: Please stay in liberal states when the lights are turned off in Mass.!
Posted on February 27th, 2008 at 7:45 pm
DP:
“Most” of the transactions were fraudulent? Please provide written statistical data supporting your statement. It amazes me how many people make sweeping statements and generalities based on what they read in the media and not supported by cold, hard facts. Yes, we are in one hell of a mess and people are losing their homes. Sure, there were predators and yes, some appraisers inflated value but I doubt if it was “most”. Yes, the mortgage industry needs to do a better job in policing itself and yes, people who committed fraud need to be prosecuted. The people who were victims of fraud should be made whole. Let’s deal with facts people and get on with solutions.
Posted on February 27th, 2008 at 7:56 pm
I think Louise’s explaination was great. Shame kapx can’t understand it. And for the record kids, please get this straight…I AM TIRED OF BEING ACCUSED OF FRAUD AND UNSCRUPLOUS ACTIVITY. BROKERS DON’T APPROVE THE DAMN LOANS, THEY DELIVER THEM TO THE LENDER WHO HAS THE PROGRAM. THE LENDERS APPROVE THE LOANS AND THEY APPROVED THE LOANS BECAUSE CONGRESS MANDATED THAT ANYONE BREATHING OWN A HOME. I WOULD LOVE TO SEE THE CREDIT SCORES OF SOME OF YOU WHINERS. NOW YOU KNOW THE REST OF THE STORY.
Posted on February 27th, 2008 at 8:06 pm
If you are the buyer of a home, and you are at all careful, you know what the real value of the home is, within a reasonable level of accuracy, because you have been looking at similar homes and know how this one stands in comparison. If the appraiser gave his approval for a significantly higher value than the actual market value, I have trouble understanding how the buyer can claim ignorance. Typically, the buyer, the agent(s), the loan officer, and the appraiser all know if the figure has been, let us say, stretched to the upside a bit.
Posted on February 27th, 2008 at 8:24 pm
Good Day,
This thread is getting a bit long in the tooth. It sure sounds like everyone here, except for a few, believe that you reap what you sow. You signed up for it, pay the man. You want to walk away from your obligations? That speaks to your morality more than anything.
Big Picture. The secondary market is frozen solid and there will be no product for most of the stated and no doc loans out there. Get over it if you have one. The only way those guys refi is for the Gov’t, with our tax dollars, to pave the way. Those folks who played smart and borrowed what they could afford will pay through their tax dollars.
(don’t get me wrong, most of the garbage being bandied about by the politicians won’t amount to beans as there is no body willing to uw a borrower with bad mortgage history today)
I repeat myself. Walls St made money on the way up and they will make money on the way down. Get into the depth of it and this market and economy is supported by a leveraging of assets that are not even on the “offical” books. Off balance sheet assets is the phrase that pays on Wall St.
(rumor has it that the leveraging equates to the tune of trillions of dollars, 13-15, thats right, almost equal to the economy itself, surprise, surprise!!)
Sure, we all want to focus on whether we can make the payment next month but the ramifications will pauperize our children. The dollar is tanking and commodities are through the roof. Real inflation is hitting the 10% mark and we want to complain about the bad guy brokers.
Listen up, sheer numbers dictate that “bad” brokers couldn’t possibly be the culprits here. I worked for the biggest banks going and let me assure you. UW’s were paid to UW. Salesmen were paid to sell. As a bank we couldn’t care less what your name was or any other “flavorings”. We only want to get paid, it is the only way to avoid buybacks and indemnification. (and it only takes one bad loan for 200k to kill quite a bit of profit dollars!)
Sorry about the soap box but there are a lot of folks that aren’t tuned into what the politicians are willing to sign up for if it means they can milk of the public teat for another term.
btw it took quite a few buyers, sellers and brokers to get a 400k condo in CA to 900K in two years. It doesn’t happen by itself.
Posted on February 27th, 2008 at 9:02 pm
damnames,
Keep telling yourself that. Also, get your head out of the sand and wake up. You and Louise are two peas in a pod.
Posted on February 27th, 2008 at 9:08 pm
What’s really funny are the people in this blog spewing the “It’s the borrower’s fault for getting into a loan they couldn’t afford….” dribble. Do you think any of these people may have worked/work for a bank or mortgage company maybe?
The truth is there are millions of people who are in serious trouble right now that had nothing to do with any sub-prime loan product. The sub-prime market sparked what is chaulking up to be a catostropic economic event. But, the ramifications that it’s having are infinately further reaching than just the Vegas-esque real estate speculator and idiot borrower who “knew what they were getting into”.
This has now adversely affected millions of real people. Everyone from the laborer in the building industry (no building, no job), the builders themselves (worst 2-year decline in history), the building supply industry (no houses, no home improvement, no job), cosumer products industry (reporting some of the worst performance since the Depression), to every single person in the real estate industry itself: Realtors, builders, loan officers, account executives, underwriters, processors, Appraisers, home inspectors, contractors, right down to….dare I say it….Starbucks. Yes, even Starbucks is now looking at closing 1/3 of it’s stores, offering $1 coffee and free internet access.
Yes, people of this blog, you should listen to the all knowing
All of this has equated to housing prices literally falling into a celestial blackhole. So when the real person, the honest person, the family loving person, goes to refinance into a more attractive, and affordable mind you, rate they see advertised everyday, they find out that they don’t qualify. Why? No job, not enough income, not enough savings, your house doesn’t appraiser out high enough, the loan program that was there last week no longer exists, the LTV requirements have changed significantely, and on and on and on.
So these people are deadbeats huh?! Get real you holier-than- thou, wanna be intelligent, rhetoric spewing, insulto-fants. We know, we know, you pay your mortgage (if you even own a home that is) and you few are the only ones in America footing the bill for all of these loser deadbeat home owners, right? Uh huh.
Lord knows it would be absolutely ridiculous for any tax paying, decent American citizen to expect, YES EXPECT, help from their government when havoc is being wreaked daily to the economy. Why don’t you spew your crap to the face of my neighbor and his family who are in the midst of having the house they’ve owned for 12 years be foreclosed on because he lost his construction management job to this whole bank/Wallstreet created debacle? Or my Architect friend that just lost his job, has had his car reposessed, and will most likely be facing foreclosure on the house HE BUILT. I’m sure they would receive your words well if you say that to their faces.
People are starting to lose BIGTIME. Retirement plans/401ks losing 2/3 of their value, companies closing their doors and then having the legal right to raid the former employees’ pension plans.
We all know that the Feds have never supplied trillions of tax payer’s dollars to subsidize the “private” Fannie Mae, Freddie Mac, large banking institutions, the oil companies, the airline industry, etc. (all whom are given the card blanche legal right to shit on the American people whenever they see fit with no recourse whatsoever), then why in the world would WE, the honest American tax paying people, expect any help when we need it? I mean really…..wait a minute, that’s right, they do give trillions of tax payer’s dollars to bailout or subsidize those industries. Some even get tax incentives and/or relaxed regulations, or all of the above.
So blog readers please understand that all of the Irishchick, JoJo, Mary, Marc, Thomas, Tom, Louise, and Paul’s of the world know far more of what’s transpiring than any of us. They have “special” insight that the only ones being adversely affected by all of this are merely the idiot borrowers and speculators. Brilliant!!!
Posted on February 27th, 2008 at 9:08 pm
If home prices go UP, everyone acts like Donald Trump or Mr Flip that House
when prices go down, everyone runs to mommy gov’t to bail them out (banks and home owners both)
Greed worked on BOTH sides, the bank got fat fees and the borrower thought he would game the system to quick riches.
Did the banks rip people off? Yeah. But don’t give me this line of bull about all these “poor victims” being foreclosed on. Thes people said to themselves “no prob, we’ll either sell or refi and pocket that 15 - 20% appreciation” Now that the market is down, it’s all whining and crying.
What would these folks do if home values kept going up? Spent the money of course. But now its oh boo hoo, gov’t bail me out. So when prices go up, you pocket the cash. When prices go down, you send me the taxpayer the bill.
Posted on February 27th, 2008 at 10:27 pm
I will not address what the judge said. He is obviously working his own agenda. But I will address something else.
I read through most of the replies but I must now respond. Originally, I thought the same as many of you, “let the buyer beware”, etc. But no longer. And here are the reasons:
I have looked through the loan documents of too many borrowers, read too many adjustable rate riders, reviewed too many TIL’s, and too many HUD 1’s, and compared these to what borrowers were promised, what original disclosures said, and so much more. What have I found?
1. TIL’s completely wrong.
2. Adjustable rate riders so confusing that even educated cannot make them out.
3. Adjustable rate riders not conforming to TILs
4. Recission notices not filled in.
5. Interest rates not comparable to the initial disclosures.
6. GFE’s wrong.
7. Undo points charged. Often discount points for loans where there was no reason to have discount points.
8. Signings where the notary came out, signed everything in 15-30 minutes, just shoving things under the borrower’s nose and then gone.
9. Spanish people not able to read English documents. Nor the docs translated properly at signing.
I can go on and on.
Have you sat down and read line for line the adjustable rate rider and other documents? If not, do so. You will find them hard to understand. It will take 2-3 readings to understand well, and we are in the business. How can someone not in the business be expected to understand the docs?
As well, we all know that the subprime loans were sold with the LO saying, ” Don’t worry, home values will go up and we will refinance you in two years.” This was a standard practice with lo’s and real estate agents. The tell the buyers anything to get the deal. And the buyers would believe what these professionals would tell them. And anyone here who denies that this happened is not being honest. And probably did the same themselves.
As to the buyer knowing what they could afford or not, large numbers relied upon the lo and the realtor to let them know what they could afford. And the lo’s did not do their jobs because they wanted the commission.
Lenders did not adequately determine the ability because they were under pressure from management to approve everything. Management was under the pressure of Wall Street to do every loan possible.
The reality is that the borrower was the least culpable in this whole mess. They relied upon the “professionals” who were lying through their teeth. And theirin lay the problem.
As to remedy, I fully support individuals hiring lawyers and going after the lenders for fraud and deception. It is not worth much to go after brokers and re agents, because we don’t have any money anyway. The lenders did this, and they show reap what they sow.
Of course, in the end, the taxpayer will pay for much of this. As always. To try and suggest otherwise or complain is simply wasting good oxygen. It may make you feel better, but it won’t accomplish a thing.
BTW, one of my clients just won a major victory against Ameriquest in court yesterday. If Citi can’t overturn it, and to try and do so, it will involve them arguing the opposite of what they argued at the outset, then my clients and their lawyer have a loan rescinded, all payments and costs returned to them in the amount of $60k, plus legal fees. The loan is now a non-secured loan that is held, no longer a mortgage.
Posted on February 27th, 2008 at 10:47 pm
I agree with ValueWatch that there are millions of people in financial trouble, and not just those involved with sub-prime loans. The two cases that you referred to of your neighbors who are in financial trouble do not appear to involve lending fraud. But to expect the government to bail out everyone who has financial problems is not realistic, nor does it result in a place that anyone should actually want to live. We are talking about replacing the American dream with a socialist nightmare where the way to get ahead is to claim that you are a greater victim than anyone else. The result is a society far from the traditional American one of independence and personal responsibility.
Big picture, going beyond the mortgage and housing issues, the government is certainly the root cause of the financial disaster that is beginning to unfold. Easy money policies and lax regulation made speculation, credit issuance, and banking the center of our society, with genuine productive efforts relegated to second place. K-Mart bought out Sears, instead of the other way around, because they knew how to play the money game better, not because they were a better retailer. And now everyone is clamoring for the government to bail us out. Consider, for a moment. The government creates a problem. Now we are asking them to solve it. Their solution will be more credit expansion and more power over our lives. They give us disaster and we beg them to take even more control over our lives.
Posted on February 27th, 2008 at 11:36 pm
Valuewatch,
Just checking to see how the chat was going, I noticed your comments. You sound very angry. While I have to say how sorry I feel for your friends and neighbors, I think casting a broad net over the situation won’t really help.
The situation will take experienced, honest individuals reviewing each case to find out what really happened. There is no quick fix, and everytime in my long career of finance that a QUICK FIX is applied it ends up creating more problems. The man who is looking at not paying his mortgage because it is not financially convenient, that is not the banks fault.
The real estate market has it’s booms and it’s busts. There are indeed people who did not know what they were getting, because they simply didn’t understand and maybe didn’t ask. Sometimes I find that people are reluctant to tell me they don’t understand for fear I will think they aren’t smart or something. There are also a very large number of people who chose to take the riskier routes for the possibility of huge profits in flipping and subdividing properties. It is cyclical, it has happened three times in my career, the market stalls and then variables complicate it.
We will come out of it, we always do. I am praying that the next boom includes a very strong sense of long term goals. I know that this has definately gotten rid of those people who where only in finance for the quick buck.
Posted on February 27th, 2008 at 11:42 pm
I love these idiots in Mass, really a bunch of morons. When was the last time that you had 60 pages of documents, a lawyer, and a closing agent and you still can’t figure out what your terms of the mortgage are. Even better is the fact that a customer does have the option to pick an ARM or a fixed loan product and they have the choice to choose a different mortgage broker, direct lender, or bank. Let’s not forget, this is America, so if you feel that the deal is not square, use your power of choice.
This TRULY is a feel good decision. What happened here, as did in many EXTREMELY hot real estate markets, is that speculators and regular Joe’s did whatever they could to get real estate because they thought it was an investment that they could understand unlike stocks. Let’s get real here, our culture gets crapped on all over the world because of our lack of accountability. Fremont, or other lenders for that fact, cannot run out to every closing and ask customers if they are truly reading and understanding the multiple documents they are sounding. That is why third parties (or safety nets) such as title agents and lawyers are involved. But hey, prices aren’t going up and someone made a bad decision and government isn’t making enough tax revenue, so someone has to be a scape goat.
The last point I want to make is the fact that I have an “A” paper mortgage that is an ARM. I put 20% down on my home but chose a 5/1 ARM because it was roughly 75 basis points less than a fixed loan and I figure I will be out right around the 5 year mark. How do you think my loan works? It has a lower rate for 5 years and then it adjusts. I love how all the sheepish media puts in the “teaser” rate terminology. Guess what genius, the point of an adjustable rate mortgage is so you can have a lower rate, pay less interest, in case you aren’t going to be in a home for the duration of the loan. It is so the CUSTOMER can save money on interest, by not having to pay the highest interest rate available, aka a 30 year fixed. Now if you are going to talk interest only or option ARM’s, there is a different arguement, but once again those complex investment instruments are meant for people who understand them and they still have to read like 60 pages of docs. Look, people know the basics of stock trading, but even if they don’t know how to trade futures or options, they still can if they have money. Loans are the same way. You cannot assume that a person is an idiot and doesn’t know what an option arm or a interest only loan is. If they qualify on paper, they can roll the dice, and these complex loan products are meant for people who understand the way these instruments work. Once again, your lawyer, closing agent, common sense, or any basic research on a mortgage can provide you with enough fire power to know what you should or shouldn’t do. We live in the information age yet people still can put in a little research on what types of loans are out there and what is good and for who? Really, we have to stop looking for a scape goat because people are good ol’ fashion idiots.
Posted on February 28th, 2008 at 12:51 am
I should have read what I wrote before posting it. Sorry for the many typos and incorrect punctuation. Just got back from drinking a nice bottle of wine and eating a hearty steak. I bet the Euro’s hate me for that too!!!!
Posted on February 28th, 2008 at 12:55 am
Cyclical market variables are usually not implemented by the industry that manipulates the market. Historically, past downturns in the housing market have been due to external variables; such as a depression or recession of the entire economy - that in turn led to the downturn of the housing market.
The difference here; the downturn in housing is now causing a recession/depression of the entire economy. This will affect everyone, there are many innocent victims unfortunately.
Hello pot, this is kettle.
Posted on February 28th, 2008 at 1:05 am
I used to be an underwriter for many of these companies. !st and formost everyone including the borrower are getting exactly what they all deserve. The lenders for bending the reality of home ownership. The realtors and appraisers for inflating the costs of homes based on eronious values. And last but not least the borrowers, who thought they would buy a home and flip it in 6 months and make 20-30-40,000 when they sell it.
Greed gets everyone sooner or later!
Posted on February 28th, 2008 at 7:31 am
whoever you are mutha fucker! i mean christopher maybe your a loan officer now this days you dont make money nomore or do some fraud or shcme people getting a toxic loan or ARM shit! now now lending practice dont aply to you anymore like it used to before now screw you r self and your family you full of shit! the judge are doing the right thing your the idiot burn in hell mutha fucker.
Posted on February 28th, 2008 at 7:36 am
all you motherfucker in here think you know better your all full of shit! you talk and talk but you guys dont do shit! so burn in hell all you muthafucker specially the mastermind of this big time scheme of the century the wall streeet pigs,banks,lenders,realestate agent,loan officers,appraisser. so i hope all you muthafucker die and burn in hell.
Posted on February 28th, 2008 at 7:47 am
As always, Hans, you are a breath of foul air.
Posted on February 28th, 2008 at 9:50 am
I have a chance to read all of the posts and I think many of you dictractors have misunderstood my post.
I was in complete disagreement with the judges reasoning which is (paraphase) Home appreciation is a basis by which the state can determine whether or not a mtg loan is “fair” and whether or not the borrower is obligated to repay the loan.
This has NOTHING to do with predatory lending, misrep, or fraud on the lenders part. Remember folks, some people are destined to rent.
Posted on February 28th, 2008 at 9:56 am
I have had a chance to read all of the posts and I think many of you dictractors have misunderstood my post.
I was in complete disagreement with the judges reasoning which is (paraphase) Home appreciation is a basis by which the state can determine whether or not a mtg loan is “fair” and whether or not the borrower is obligated to repay the loan.
This has NOTHING to do with predatory lending, misrep, or fraud on the lenders part. Remember folks, some people are destined to rent.
Posted on February 28th, 2008 at 9:58 am
Irishchick, I think that you may have mis-read the tone of my post. I’m not angry at all, I’m actually just stunned. I’m a person that believes the less government the better. I never said that anyone should be bailed out by the government. In fact, I said several times that those deserving people who need it should be “helped”, and I see nothing wrong with that. My neighbors who are staring foreclosure inthe face had nothing to do with a subprime loan or speculative purchase. They are victims of the situation and they deserve a respit. So do millions of other American people.
“Dave” bought their house with a standard 30 year fixed mortgage. The problem arose when he lost his job in the consturction industry, drained every dime of his savings account paying the mortgage and property taxes, then is forced to try to pull some money out of HIS house. But wait, he can not do this because the housing prices in our neighborhood have dropped by 25%. Does he still have equity? He sure does but, it’s only 15% equity left because of this ridiculous bank created downturn. 4 banks now tell “Dave” sorry but you don’t qualify because of your lack of reserves, lack of home value, and lack of equity lack in your home (LTV). Still there are people on this blog claiming it’s the stupid idiot people who got into the risky loans who are paying. No it’s not “geniuses”, it’s now affecting everyone.
Let us explore just some of the ways the government is “helping” out the American people shall we?
-Giving everyone an $800 check to help stimulate the economy. Yeah, for about 1 week maybe.
-Getting banks to lock in the rates of a defaulting person’s ARM to “help” them out. Now who does that benifit when the interest rate gets locked in when the interest rates around you are falling to levels not seen in several years? Evey heard of a yield spread premium people? Lock it in at a higher rate and the bank pockets the difference between the locked rate and the market rate. Now, the loan is worth a lot more to the bank as well as the next buyer of that loan. It works the same way with a bank that it does with a broker folks.
-Staying foreclosures by up to 90 days does what exactely? Is the housing market going to rebound in the next 3 months or something? So, the home owner has time to do what, go get that additional education they need to re-train for another field and then go out and find that perfect job that nobody else is applying for and, in turn, then get caught up on all of their back payments, interest, and late fees now? Uh huh.
-A day ago it’s announced that the government has just taken out a huge amount of the financial safety cap requirements so Fannie Mae can have access to more money thereby making it far more likey that the entity will fail and need what….more tax payer money to BAIL THEM OUT.
-Banks getting 75 BILLION so far in federal monies to stave-off insolvancy. Bernanke said today that they will undoubtably need much much more in coming quarters. What? Last I checked it was some of you people in this blog that didn’t want the government getting involved in business because it’s Socialistic. If they can’t keep their own damn heads above water then why the hell do they get BAILED OUT?! Now who does this “help” exactely?
Many of you are taking the stance that it’s the poor little banks that are losing because of all of the foreclosures. No, no, no my naive friends. If that’s what you believe then you are obviously not privvy to how this game works. They make more money on the loan than the amount of the loan itself. Sometimes multiples more due to “securitization”.
This is how it works (in a simplified nutshell) - Any 30-year mortgage has nearly that same amount of interest profit as the amnount of the loan itself. Well, this is only part of what makes them so valuable. The banks make money on the interest charged, on the fees charged, they make money by selling the loans over and over again, they make money by being allowed by the government to simulaniously package up the loans up and sell them to wallstreet in a “securitized” packages (the ultimate scam of all time), they get more money out of those “securitized” packages because they have them rated AAA by rating agencies that only get paid for a good rating. The rating agency, by shere luck of the bank (uh huh), get paid by the very bank whose “securitized” package they rate! Don’t believe me? Don’t take my word for it, look it up. Now, the goverment allows the banks to take these “securitized” packages of loans OFF their books so the bank’s stock looks 100% better and more profitable than they would with the loans ON the books. This way investors like you and me (well, no me) will continue to purchase their crappy bank stocks thinking it’s a great investment. It’s said that fully 25% of the AAA rated “securitized” packages of loans have defaulted. Too late though, the money has already been made. Investors lose and the American people lose. The banks have already made more money on each loan than the loan amount itself and, because of this “legal” scam scenario, often as much as 3 to 4 times more than the amount of the loan itself. Poor little bankie wankies.
They’ve already made their money in every government given scam of a way possible down to the last dime, and then they get to take back the house of “Dave” and his family that had nothing to do with any of this BS.
Not angy Irishchick, just stunned.
Posted on February 28th, 2008 at 1:12 pm
Hans:
After reading some of your responses on the website I am curious. Sometimes you are on a foul-mouthed rant that no one can understand and then sometimes your sentences are well put together and offer a cogent stream of thought. I think you are a poser who just likes to cuss online….
Posted on February 28th, 2008 at 2:15 pm
ValueWatch,
You’ve hit the nail on the head. There’s no ‘bank’ to deal with, they’ve all become loan servicers and artificially pumped up prices to get ‘transaction fees’ on handling these sums of money that all pay a percentage. Why do you think the markets with the most boom have the most bust? More SPIFF money per transaction = less work, more profit. If the servicer wants to make changes to the notes they would have to absorb the loan back onto their books and truly become a ‘bank’ again.
Problem is; they know they’ve been doing some shady stuff and want to keep these accounts in the servicing office. I’ve said this before and I’ll say it again. I’m not in the business and probably don’t have a great understanding of how all this works but at this point it doesn’t matter whether you’re sub-prime, prime, put 0% down, or put 20% down - if you entered the housing market in the last 5 - 7 years there’s a huge chance that today you are trapped in your loan - whether your particular loan was predatory in nature or not. Like it or not, as saavy as you are, or aren’t, you were paying an inflated price due to all of the other hocus pocus that was going on around you - whether or not you were a contributor.
Do you think their aren’t honest banks that don’t even peddle sub-prime products and actually keep their mortgage loans on their own books? I’m sure there are, my guess is they’re probably not so happy about this mess either.
Posted on February 28th, 2008 at 2:38 pm
Now come on JayMan, as I said in my post, I’m talking about the real family, the honest family, the law abiding family that needs help. Not the “I own 27 properties I bought with 100% financing on a Stated Asset/Stated Income loan and now I need to be bailed out of my mortgages” guy. It would take 10 seconds to discern who those idots are as compared to the people who could really use the help. My guess, JayMan, is that you pay a lot of income tax and you’re upset, rightfully so, with how you hear your tax dollars are being wasted on a daily basis, and you don’t want to see another government sponsered boondogle. If that indeed is the case JayMan, then join the club.
JayMan, I do hear what you’re saying, but the difference is that when the banks run to the government they actually DO get bailed out. The honest home owner is in trouble and asks for help to save their most valuable asset and they merely get a crooked smirk as if to say - You must be kidding right? I’m all for Capitalism, that’s why I live here. But, I’m also for a level playing field and that’s also supposed to be why I live here. Big banks are given a free ticket to do just about anything they want with little to no consequence. Is that a level playing field?
Government “help” does not neccesarily mean Uncle Sam writes people a check to pay off their mortgage. It can mean a lot of things like, for instance, making banks stay foreclosure proceedings for a 24 month period, but also requiring a minimum payment be made in the interum from the homeowner. Something like this would give REAL time for things such as re-training for another career, the time to find a job in that new career, time for consumers and RE markets to possibly shake off some of the cobwebs a bit, etc.. There are many ways a government can help out its tax paying constituancy without writing them a blank check.
Thus far, the government has not done one REAL thing to help even a single homeowner trapped in this mess in any meaningful manner. I suspect they’ll choose to sit this one out too and let the cards fall where they may. This is because helping out the American homeowner (mortgage holder) would mean angering that big bank and their shark lobbiests who single-handedly financed their political campaigns to get them elected.
This is referred to as a ~ Quid pro quo ~
Posted on February 28th, 2008 at 4:36 pm
Fed Chairman: “Some Small US Banks May Go Under”
This is just as tragic as folks losing their homes. The big players who orchestrated this congame will persist while the local and smaller fish (who also most likely got duped into lending more than an assets true value) will go under.
Posted on February 29th, 2008 at 1:27 am
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