The Mortgage Mess

Sep 26, 2008

  1. Mr. Bill
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    Mr. Bill Guru

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    Well, I guess this is the "problem" with maintaining archives on the web. How prescient it was:

    "Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits."

    and:

    ''From the perspective of many people, including me, this is another thrift industry growing up around us,'' said Peter Wallison a resident fellow at the American Enterprise Institute. ''If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.''

    Fannie Mae Eases Credit To Aid Mortgage Lending - New York Times

    1999 NY Times Article Revealed True Cause of Current Fannie Mae Crises | NewsBusters.org

    So, it looks like the Dems are ulitmately "at fault". Nice job at social/economic experimentation. What would you libs like to screw up next - health care, perhaps???
     
    Mr. Bill, Sep 26, 2008
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  2. somarco
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    somarco GA Medicare Expert

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    It is a bipartisan problem.

    The roots track back to the Clinton administration and the appointment of Andrew Cuomo as chairman of HUD but continued thru the Bush admin as well.

    Freddie and Fannie got involved. So did Wall St and foreign investors. It was a pyramid scheme where the last ones in lost.

    Loans were made to people who never should have qualified. Greed was rampant on both sides of the closing table and no one had any skin in the game.

    Liar loans with no money down. The loan underwriter and lending institution didn't care. They had no risk. Everyone got paid.

    I know mortgage attorneys who were working 100 hours per week closing loans.

    Not any more.

    Once loans started to reset and payments increased borrowers started to default. Last month over 9% of borrowers were either in foreclosure or behind on payments.

    There are neighborhoods in Atlanta where half the homes are REO.

    So much for redlining.

    The problem has been brewing for 10 years and was starting to unravel a few years ago.

    We haven't seen the end yet.
     
    somarco, Sep 26, 2008
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  3. midwestbroker
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    midwestbroker Guru

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    I turned on my TV this morning and Good Morning America was on with Palosi. She is putting all the blame on Bush. Even when they said Clinton admitted to pressuring Fannie and Freddie to pass loans to high risk people, she still said it was Bush's fault.

    What a tool.
     
  4. Crabcake Johnny
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    Give people with poor credit ARM car loans - put 'em in a new Cadillac for $300 a month....then let the rate adjust and see what happens.

    Hey, can you imagine if our industry pulled this? Underwriters start approving everything - huge influx of cash into the carriers, stock goes crazy, claims come in, everything tanks then the carrier go to the gov't with their hand out.
     
  5. moonlightandmargaritas
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    moonlightandmargaritas Guru

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    Does that $300 a munt include "gangsta wheels"?
     
  6. Crabcake Johnny
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    Actually, if you're breathing you can get a car loan. In fact, some of the "buy here pay here" outfits hope you don't pay. No, seriously. They count on it.

    Buy a wholesale car for $2,000 - sell it for $6,000 with $2,000 down. Payments are "the juice." If they make 2, 4, 6 payments it's profit.

    Pop the car a few months later, clean it up, back on the lot for $2,000 down.
     
  7. Mr. Bill
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    Mr. Bill, Sep 26, 2008
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  8. somarco
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    somarco GA Medicare Expert

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    Bought a car a few months ago. Out window shopping on a Sunday. No check book. Mighta had $20 in my pocket. Knew what I wanted and just wanted to check out a car I found online at Carmax.

    Nice car. Took it for a drive.

    They financed me on the spot with $0 down.

    I had 30 days full warranty. I could bring it back if I changed my mind in the first 5 days.

    Before the warranty ran out (used Altima) I had it checked out. Needed new rear struts. They replaced them, no charge to me.

    Never have I bought a car with nothing down. I hate buying cars but this was easy.
     
    somarco, Sep 26, 2008
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  9. Guest
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    There was a Suzuki Dealer in South Carolina who was all over TV with with ads saying "Buy a New Suzuki with no money down and just $37 a month" Of course after the first six months...your payment would skyrocket since you added an extra grand to the principal. The dealer turned a $14,000 car to a $15,000.

    But of course, the repo rate was very high and the dealer is now out of business.
     
    Guest, Sep 26, 2008
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  10. lookin4abetterwayinpa
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    It is sad, but in most cases very legal. Preying on the under educated, and or, people w/ poor judgement is the base of some businesses.

    J.D. byrider comes to mind, in the auto industry. They will finance anyone, with a weekly payment. No sticker prices on the cars, finance them first, and then say these are the 3 cars we will finance you for. Hit them w/ above 20% interest, and on top of that, they put the car at 5 to 7k above kbb, but people need a car.

    Rent-a-center, geez. People can buy a sofa, that would cost $400.00 if you bought it outright, end up paying close to $2500.00. Again, people need furniture though.

    There is a huge market out there, but not how I want to pay my bills.
     
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