Who Benefited from the Real Estate Meltdown?
- Thread starter Mr. Bill
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- 2,908
Yeh, the other thing is that that was a fairly lame investigation of Goldman's reported there. A couple "risk analysts" who seem mildly retarded trying to comment on sophisticated global finance. You can't count on the SEC, Barney or Dodd, or all the administration insiders from Bush and the Obama (Corzine included, Obama can't afford to see him indicted now either) who secretly still owe their allegiance to Goldman.
All of his various personality and moral lackings aside, I would like to see some shareholders group or public interest group or the like hire Spitzer to do a little analysis or maybe serve as counsel with an independent group. He has his uses. Yep. I know he is the biggest arsehole east of the Mississippi but he has been brought down several notches so I dont see any need to ban him from public service. If he had had wind of Madoff he would have dealt with it. The SEC however was given direct knowledge of Madoff several times over and chose to look the other way based on "priorities."
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GS and Fannie. A marriage made in hell. The number of ways that the public could (and have) get hurt is endless. This is mindboggling but the government is only raising concerns about loss of tax revenue. We are talking about letting the guys who securitized the crap that brought the world economy down do massive busines with Fannie which created the crap to be securitized.
I am telling ya. Until you hang some of these people it will not stop. Oh, why dont we just go back to creating a Consumer Protection Agency to hand out brochures on what to look for in a financial product.
Frigging Goldman should have a restraint order put out against them to keep them from even speaking to Fannie, not entering into billion dollar deals. That should be one of the conditions of their probation.
Don't even mention Barney and Dodd to me at this delicate time.
Goldman in talks to buy Fannie tax credits: report - Yahoo! News
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sainsurance
Expert
- 24
I noticed the huge flag hanging outside goldmans building,THE LAST REFUGE OF A SCOUNDREL.McClatchey is doing the country a patriotic service now it's the United states justice dept.to start the wheels rolling.This cries out for prosecution of the economic criminals both former and present.We owe it to the individuals who spoke out and were vilified,the one thing we don't need is a lot of tap dancing.
- 2,908
Good. I am up for hanging Barney and Dodd any day of the week.
- 185
not middle class America.
ajayc
New Member
Read the book/audio book BIG SHORT by Michael Lewis ..... It has very VERY interesting information about the meltdown and who benefited.
Fastest H-Town L&H Agent
New Member
Banks had been wanting into the real estate biz for a long time. After failing to convince congress they should be allowed in, they hatched a new direction. If home loans were made easily accessible, in fact, too easy, then they could get into real estate without ever asking.
If you lend an unqualified someone $$$ for a home, they will play it for at least 2-3 years. Hence, why 90% of all ARMs were written to reset in that time period. 2 years of principle payments, along with the strong rise in property values, left the bank with a debt of 98% of original principle, a residiual value increase of 10% to 30%, and now have control of the asset.
Remember, that even though they still have 98% of the debt, the actual principle payments were more than enough to cover the usage of the monies.
Now, multiply this over hundreds of times, and the banks, through default, are in the real estate biz.
Had th eprogram not worked so well, the amount of equity in each property would have gained the banks a major amount of cash per foreclosure. How much? Follow me here:
200K home, 190K mortgage. Paying 6-7% for the sub prime mortgage was netting the bank approx. $26K in interest, while only lowering the principle by about $4K. Banks gets the house back having made $26K in interest, maybe 30K in asset value increase, all on a $190K loan. Not a bad payback. Yea, they had fees for foreclosing and reselling, but that only ate maybe $9-$10 grand. And, those fees are a tax deduction.
So, we have a net profit of $46K on a 2 year loan of $190K. Move his house to Vegas, Cali or Florida, and the numbers get even better.
So, what happened? Greed. To many folks doing the same thing. Stated income loan for a W-2 employee? NINJA loans? Really guys, did we need to write 106% LTV loans on a 550 FICO?
To many houses, to many foreclosures, values fell. No magic in the prediction, was just a matter of time.
If you lend an unqualified someone $$$ for a home, they will play it for at least 2-3 years. Hence, why 90% of all ARMs were written to reset in that time period. 2 years of principle payments, along with the strong rise in property values, left the bank with a debt of 98% of original principle, a residiual value increase of 10% to 30%, and now have control of the asset.
Remember, that even though they still have 98% of the debt, the actual principle payments were more than enough to cover the usage of the monies.
Now, multiply this over hundreds of times, and the banks, through default, are in the real estate biz.
Had th eprogram not worked so well, the amount of equity in each property would have gained the banks a major amount of cash per foreclosure. How much? Follow me here:
200K home, 190K mortgage. Paying 6-7% for the sub prime mortgage was netting the bank approx. $26K in interest, while only lowering the principle by about $4K. Banks gets the house back having made $26K in interest, maybe 30K in asset value increase, all on a $190K loan. Not a bad payback. Yea, they had fees for foreclosing and reselling, but that only ate maybe $9-$10 grand. And, those fees are a tax deduction.
So, we have a net profit of $46K on a 2 year loan of $190K. Move his house to Vegas, Cali or Florida, and the numbers get even better.
So, what happened? Greed. To many folks doing the same thing. Stated income loan for a W-2 employee? NINJA loans? Really guys, did we need to write 106% LTV loans on a 550 FICO?
To many houses, to many foreclosures, values fell. No magic in the prediction, was just a matter of time.
- 376
All the homeowners who sold at high prices benefitted. Realtors who sold the homes benefitted. Mortgage Brokers who charged ridiculous YSP on loans benefitted. Appraisers benefitted and so did inspection companiesl. The real estate transaction needs to be more regulated. There was so much fraud going on. I don't know how the banks allowed most of those loans to close. In the end the investors in the secondary mortgage market got screwed and some banks who actually don't sell the loans got screwed.
- 171
That's why you don't trust bankers......
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