These guys are saying it how it is. Most of the subprime mortgages were little or nothing down to the buyer who is only out their monthly payments they managed to make and after months of not paying they're coming out ahead of renting. The bank is out the cost of the house. The banks need to get these people out of their houses as fast as possible and recoup some of the losses before massive failure sets in. The Government has been standing in the way for a year now.
All you broke interns who wonder when you'll ever be able to buy ;listen up; These houses could be yours at decent prices. Go to hotpads
and check out the blood in the streets. These could be yours if they could get the squatters out.
Well, that was the deal; nothing down and shitty rates. If people walk away then they walk away. If I'm willing to write a mortgage for a five hundred thousand house to someone with no proof of employment and then sell that mortgage to you and you do not do any research on that mortgage and then if you can get some numbnut to insure the loan that you bought from me which you did not do any research on before buying just in case the loans go south and then the insurance company can get bailed out because they didn't research what they were insuring. The fact is every one involved was looking for fast cheap profits. This is what people should be pissed about rather than the fact that some schmoe got a loan he couldn't afford. Getting a loan you can't afford is never an issue when you get it and if all you are losing is your credit rating if you default, well, credit ratings can always be rebuilt with the help of little or no down payment high interest loans and credit cards. Be pissed off at the assholes who created the problem and those who were charged with regulating the industry rather than some yokel who ain't payin the mortgage on his upside dryvit monstrosity inside the gates of cul-de-sac hell...
An aside....
That's the rub. You can buy if you have the down payment. but in our society now the general populace has been weened away from the teet of savings. If you want people to save massive amounts of cash for down payments on big ticket items the economy is not stimulated by credit and got to have it now purchases. and then no one is at home depot, or lowe's buying products to spruce up their low down payment homes or at crate and barrel or pottery barn or target or ikea fillin up their new low down homes with crap and they aren't buying scrapbooking materials to make scrapbooks of the pictures of their little towhead kids playin in the backyard in the above ground pool or on the swingset that they bought on easy installment plans and they have no videos to send to grandma from their video camera that they bought at circuit city and uploaded on their pc and on and on...It's already all over the business news the spin about patriotism and purchasing. Before we weren't saving enough and now we aren't buying enough. Crazy days man. Off to find a hotpad.
Those are bond traders trying to guess the futures market of our treasuries and they are seeing them go off a cliff because half this country is a bunch fucking losers - just like Rick said. These guys dont make the rules, those are created by your sub prime ass lov'n Barney Frank muscling Fannie and Freddie to expand the low income home ownership roles in DC and the bullshitters in New York who cut and ran when they closed shop in September. The next step is break the banks by not letting them foreclose and auction these properties and setting a floor, then Pelosi and company can fist fuck every last productive part of the country. In four years the Democrats are going to look even worse than they did in 83. Even the fucking republicans are starting to look intelligent.
And if you want to attack Rick Santelli Hes been an outspoken zealot for the last 5 years along with a lot of Fed Fund traders against the Fed's policies. These guys are the canaries in the mine making the market for short and long term treasuries and they are starting to die.
The mortgages are only half the issue. Citibank et al were allowed to securitize these and resell them. They had ZERO incentive to make sure that the mortgagees could pay for them. The people who signed off on them should go to jail. Go into your Countrywide office and start arresting people. Arrest you local B of A branch manager. This is what justice would look like.
I'm still wondering about this...had someone had their eye on the ball and not allowed this housing bubble slash bundled subprime loans bundled and sold again all with sparkling ratings by the way, had all this not happened, would there have been something to crash at all? in other words, was the growth/wealth created in the last few years all just a result of the f'd up policies that are now coming to light?
he federal government agreed Sunday to take unprecedented steps to stabilize Citigroup Inc. by moving to guarantee close to $300 billion in troubled assets weighing on the bank's books, according to people familiar with details of the plan.
Treasury has agreed to inject an additional $20 billion in capital into Citigroup under terms of the deal hashed out between the bank, the Treasury Department, the Federal Reserve, and the Federal Deposit Insurance Corp. Treasury officials will charge a higher interest rate for the capital injection -- 8% for the first few years -- than it has charged to dozens of other banks now borrowing money under the government's the $700 billion rescue package approved by Congress last month.
In addition to the capital, Citigroup will have an extremely unusual arrangement in which the government agrees to backstop a roughly $300 billion pool of its assets, containing mortgage-backed securities among other things. Citigroup must absorb the first $37 billion to $40 billion in losses from these assets. If losses extend beyond that level, Treasury will absorb the next $5 billion in losses, followed by the FDIC taking on the next $10 billion in losses. Any losses on these assets beyond that level would be taken by the Fed.
But allowing Citibank to gobble up other banks so that they are so big that you cannot regulate them without imperiling the world financial system is ok?
THEY NEVER SHOULD HAVE BEEN ALLOWED TO SECURITIZE MORTGAGES AND NONE OF THIS WOULD HAVE HAPPENED because they would have made sure that the borrowers could have paid the mortgages.
They shouldn't have been allowed to securitize mortgages and they should go to jail, and the homeowners should be kicked out and the clean banks should be allowed to gobble up the houses and resell them for a profit. One wrong doesn't make another right. But this fix is not a fix, nor does it restore confidence. It simply prolongs the agony.
As for securitization of the mortgages, this was passed by 3 republicans and its still a source of great debate whether the riders Bill Clinton mandated about low income and minority lending quotas under the Community Reinvestment Act and threat of veto derailed this system. Those provisions made certain that any institution wishing to lend in a given city had to supply a quota of low income loans, which kicked into high gear in 2003 after a failed attempt by the republicans in congress:
"In 2003, the Bush administration recommended significant regulatory overhaul of Fannie Mae and Freddie Mac. However, the Democrats opposed that proposal, fearing that tighter regulation could sharply reduce financing for low-income housing, both low and high risk. Under immense lobbying pressure from Fannie Mae in association with Congressional Democrats led by Rep. Barney Frank, the Republican controlled Congress did not introduce any legislation aimed at bringing this proposal into law until 2005.
In 2006, the Federal Housing Enterprise Regulatory Reform Act of 2005 (first put forward by Sen. Chuck Hagel)[15] where he pointed out that Fannie Mae's regulator reported that profits were "illusions deliberately and systematically created by the company's senior management".[16] However, this legislation too met with opposition from both Democrats and Republicans. This bill was passed by the House, but was never presented to the Senate for a vote."
Barney Frank is at the epicenter of this along with Hillary and Geithner. They have protected the relationship between Lehman, Bear, Goldman and Lynch and the Fannie Freddie garbage dump. When the revolution starts its going to be them thats splattered against the wall first.
Poor first-time homeowners who never could have been expected to make mortgage payments or cavalier investors who "flipped" properties to make quick speculative bucks are typical subprime borrowers.
Most subprime borrowers -- nearly 90 percent -- aren't first-time home buyers, and fewer still are the flippers using subprime financing to turn junk bungalows into posh digs on cable TV shows, according to studies by the nonprofit Center for Responsible Lending in Washington.
"These are people who are living in their homes who are really in trouble, not just people who made a bad investment decision," said Center economist Debbie Gruenstein Bocian.
What credit experts call "serial refinancing" by existing homeowners fueled the subprime fire. Because interest rates remained low through the late 1990s and early 2000s -- and residential housing prices kept rising -- homeowners could take advantage of "cash out" re-fi deals that provided progressively larger loans than the value embedded in first mortgages. Borrowers pocketed the difference.
To lure clients, an increasingly larger pool of mortgage brokers took chances on borrowers carrying greater risk of default. Their most tantalizing "teaser" was a no-down-payment loan bearing low initial interest rates that would "adjust" to higher rates and, therefore, higher payments. Most applicants could afford the low starter bills, but if the rate floated higher, many would be put at risk of defaulting.
"Cash out" home equity re-fi's and other subprime loans account today for one-fifth of all outstanding mortgages -- and more than half of all foreclosures, according to the Mortgage Bankers Association's National Delinquency Survey. Although adjustable-rate mortgages make up only 7 percent of the mortgage market, they're tagged to 43 percent of foreclosures.
"Here's the way these things were sold: People got phone calls that said, 'I'm going to lower your monthly bills by $300 and you can use that to pay off your credit card bills, or pay off your medical bills. Come in and sign the paperwork.' People assumed they were getting a good deal, because interest rates were going down and no one told them that the loan would re-set and they could lose their homes," said Bocian.
my wife and i bought our home with an 80/20 mortgage 6% on the 80 and a 5% or so variable on the 20. our property value has gone from 229,000 to 179,000 - by the property tax estimate - and i, being an architect, am somewhat concerned about my income. now, because my home is underwater, should i not go after the program that the govt has put out?
you conservatives crack me up. well if you want class warfare, it's coming, just you wait, when your neighbors stop paying their mortgages and the "troops" start coming to evict, you suburbanites will be living in the new ghettos.
WASHINGTON — As the economy worsens and Election Day approaches, a conservative campaign that blames the global financial crisis on a government push to make housing more affordable to lower-class Americans has taken off on talk radio and e-mail.
Commentators say that's what triggered the stock market meltdown and the freeze on credit. They've specifically targeted the mortgage finance giants Fannie Mae and Freddie Mac, which the federal government seized on Sept. 6, contending that lending to poor and minority Americans caused Fannie's and Freddie's financial problems.
Federal housing data reveal that the charges aren't true, and that the private sector, not the government or government-backed companies, was behind the soaring subprime lending at the core of the crisis.
Subprime lending offered high-cost loans to the weakest borrowers during the housing boom that lasted from 2001 to 2007. Subprime lending was at its height from 2004 to 2006.
Federal Reserve Board data show that:
* More than 84 percent of the subprime mortgages in 2006 were issued by private lending institutions.
* Private firms made nearly 83 percent of the subprime loans to low- and moderate-income borrowers that year.
* Only one of the top 25 subprime lenders in 2006 was directly subject to the housing law that's being lambasted by conservative critics.
The "turmoil in financial markets clearly was triggered by a dramatic weakening of underwriting standards for U.S. subprime mortgages, beginning in late 2004 and extending into 2007," the President's Working Group on Financial Markets reported Friday.
Conservative critics claim that the Clinton administration pushed Fannie Mae and Freddie Mac to make home ownership more available to riskier borrowers with little concern for their ability to pay the mortgages.
I'd like to see Alan Greenspan as the first one to be tarred and feathered. The Federal Reserve is the biggest culpurit. Yes, politicians threw gasoline on the fire no doubt, but the Fed is the one that manipulates markets.
It was Greenspan that lowered interest rates after 9/11 to ridiculous levels which started the whole housing asset bubble.
It was Greenspan which fueld a great M3 monetary inflation during the 90's which fueled a dot com asset bubble. (Layman call it a Clinton economy but good economists know who has the real power.)
Now Bernanke is in charge and out of options to reinflate the economy outside of monetizing the debt. Read your history about the Weirmar Republic. This is going to make 1970's inflation look like a cake walk.
Why we give power like this to an unelected official is beyond me. My suggestion is to buy gold.
Don't waste your breath with facts, beta. It's like trying to reason with a rabid dog.
If Rush Limbaugh went on the air and said the sun rises in the west, you can be sure all his brainless dittoheads would be hitting internet message boards claiming it to be true.
Everything you posted is true Beta, private banks lent the money and originated the loans. Why? Because the back market was created for them to dump them - Fannie / Freddie. No risk for the bank. They just got the fee. Why couldnt the banks hold the note themselves? They wouldnt in a million years make such a loan if it was their money at risk. All the banks did was originate the loan, essentialy the sale force for Fannie and Fredddie. A big part of the reason BAC and Citi are in trouble is that they were on the back end of buying these CDS packages whereas your typ suburban bank and trust just got a fee and has no risk. They are hurting more because of local businesses downturning and lack of deposites.
Beta I ask you on your house, why did you take out an 80/20 rather than a 30 yr fixed? Could you not afford the fixed? Might you have biting off more than you could handle then? No offense but that was your poor decision not mine and Im not paying for it. Wait it out until values come back or take the loss but dont spout off bout "class warfare". under 10% of the mortgages are underwater meaning if theres a "war" I think us 90% would make it a quick one.
beta - by saying you have an 80/20 loan does that mean you put zero downpayment at time of purchase? Since you claim to be underwater you could theoretically just walk and just take the hit on your credit rating. Write off those mortgage payments as "rent."
The problem is with zero down type mortgages the buyer has no skin in the game. Historically people had to have minimum 20% down to get a loan. That protected the lender from a reasonable amount of asset deflation. Going from 229 to 179 is just a fraction over 20% loss. Under that scenario if you were foreclosed on, for one you'd be out $50k, but the lender would be out very little.
I don't blame you for doing a piggyback loan. Had to do the same thing myself with an 80/10/10 primarily because home prices were so inflated that it was impossible to save that 20% down payment. So I did have a "subprime" mortgage. High interest with balloon payment. Spent several years paying that bastard down and now have over 20% equity given my original purchase price. My home has lost value too, but I sure as shit ain't walking on my $50k.
LIG is your typical delusional liberal - it sounds cool and makes them feel cool, like owning an ipod its a badge of trendiness which makes them more dangerous than the supposed right wing nuts he's always accusing people of being - and LIG Ive never once even heard Rush speak and think hes rather a pig from what Ive seen of him on TV.
These people arent progresives, their not smart - they are angry. Angry they suck, jealous of others - its a movement of channeled anger and hate and they invest their emotional energy is demigods and celebrities who are far worse in their back room dealings than any of the "wing nuts" they claim to be against.
How about Obama's backroom deal to funnel tax payer money to private hedgefunds in Chicago and New York? Awesome!!
"The Obama administration hopes to jump-start this crucial machinery by effectively subsidizing the profits of big private investment firms in the bond markets. The Treasury Department and the Federal Reserve plan to spend as much as $1 trillion to provide low-cost loans and guarantees to hedge funds and private equity firms that buy securities backed by consumer and business loans.
The program also does not try to change securitization practices that, many investors say, spread risks throughout the world and destroyed financial institutions. Policy makers acknowledge that for now, fixing credit ratings, reducing conflicts of interest and improving disclosure can wait.
Under the program, the Fed will lend to investors who acquire new securities backed by auto loans, credit card balances, student loans and small-business loans at rates ranging from roughly 1.5 percent to 3 percent.
Depending on the type of security they are borrowing against, investors will be able to borrow 84 percent to 95 percent of the face value of the bonds. Investors would not be liable for any losses beyond the 5 percent to 16 percent equity that they retain in the investment. "
See - He's the same as the last guy retards except your too fucking stupid to see it. Hedge Funds were his biggest corporate contributers and also a big part of the packaging of the CDS market and now they're getting their payback.
we could fix the 20 no problem, and take on another 200 in mortgage payments a month, our debt to income is around 29% our credit card debt is low, and our two car loans, with one finishing up this year. we are not in the sub-prime category. we kept the 20 adjustable thinking that the rate would drop, and it has. we did the 80/20 to avoid PMI.
the fact that my home is underwater has nothing to do with me or my loan, it has to do with rampant speculators, and their lust for money.
here's the thing about your logic EP, the 10% can fuck your world so fast you wouldn't know what hit you. if the 10 started leaving empty homes, then the criminals come in and steal the copper, then the crack addicts move in and squat, then your former neighbor's home explodes, well, that 10% is long gone and your "comfortable" ghetto palace is that much lonelier.
besides if you really think you whitebread conservatives can handle streetminded knuckle draggers like me, well, lets just say i don't much sand kicked in my face before i get all medieval.
Thanks for proving my point about ignorant, hate filled left wing lunatics such as your self who have the audacity to think I live in a nice white bread suburban bedroom comunity and make sweeping generalisations about "my world". You clowns want a revolution -
So if your payments arent a problem, and you could afford more debt, then why would you take a handout? Suck it up for a couple years until prices come back. From 76-84 home prices were flat. Our grandparents and parents didnt say Gee Im losing eqity, someone make up the difference.
Be careful, beta. EP cut his teeth in the mean streets of DuPage County, and now lives in a high-rise on Chicago's rough-and-tumble Near North Side. He's one bad motha fucka, and I'm sure he wouldn't piss his pants if some sort of civil unrest actually did break out and his doorman wasn't able to hold back the tide.
It's his Libertarian buddies I'm more concerned about. When they perceive that somebody less deserving than them is getting a slice of the pie, they tend to do things like this:
That's the core of Libertarianism: "I've spent my life sucking what I can from society, but fuck you if you try to get a morsel for yourself."
Unlike EP, at least McVeigh and Nichols actually have the balls to put Libertarian ideology into action. I'm sure EP is happy to stand on the sidelines and cheer, though, as long as he doesn't get his hands too dirty.
from today's wall street journal: 'if this crisis proves nothing else, it proves you cannot help people by lending them more money than they can pay back'
is being able to refinance a handout? i must have missed something. so, i, like those "principled" republican governors, should bitch and moan about the plans, posture and threaten not to take the stimulus and then take it anyway? how about i don't bitch about it, and still take the $$ and save my breath.
76-84 home values were flat, but they were not cratering. believe me, i want to suck it up, i like the money i pay for my home. we couldn't afford to buy a home in jersey, now we can. we make total over 100k a year. more than able to afford it, but here's my point; until i am on my own - if ever - i am, like most here, working hard and praying that tomorrow i still have a job.
oh, and i certainly don't sweat whitebread republicans, not today, not yesterday and not tomorrow.
this kid grew up poor, and knows what it's like to have to work hard or see a single mother work 20 hours a day to put food on the table for 4 kids.
Congratulations, step over hear for your hardluck handout. I had 2 parents and who had a small business and had clean construction sites at 5 years old, no heat sometimes and my grandparents were burned out of their house on the west side which is how we got to DuPage. I dont give a fuck about your pain, your poverty, race or martgage.
i dont care about you loser parents, as far as i'm concerned your dad probably dodged the draft, and your grandparents lived off the back of other people. i certainly don't give two shits about you and your rummaging through construction sites.
Thats the problem with you deadbeats - you think your the only ones who ever had it bad when it more that you cant do do anything about it except burn your neighborhoods, shoot each other and cry for handouts.
seeing as how i pay my bills, and my mortgage, i think i will take that money. just so i can say EP is funding me, that way i can feel like a real republican fat cat.
Why? Because right now theres some 2+ million refis going on who are going to screwed if Obama decides underwater people should get a special 3% rate? Fuck that. Thats penalising the thrifty at the exspense of the thrifty.
all mortgages are subsidies, regardless of who takes it out, or how poor or wealthy they are. unless you are paying cash for your home, you are getting a hand out.
Yes - fuck them to. I havent gone on a vacation in 10 years. Ive never had a credit card balance EVER and no debt besides a very managable mortgae. The rest of you can fucking go to debtors prison for all I care.
let's not forget one simple thing; if a small % of the loans are the problem, then how did we end up here? we are here because of the 30-1, 40-1, 100-1 leveraging, CDS and MBS.
what, you want a medal now too. i guess you don't have a car loan, don't have student loans, and pay cash for everything. i guess you have money in the bank, or did, and your 401k, i mean 201k, is now in the shitter. i am sure you don't have your money in any of the zombie banks too, or any bank that is getting bailed out...
Ive never had a 401K because its a scam, I have all my money in a zombie bank which is a zombie bank because they arent selling off the Non performing assets (Yet ) and the bailouts are investments to be paid back as government is priority shareholders.
Look the government has to say get out of these houses now, and banks start auctioning them off! Until that happens, nothing happens.
Washington, DC – The following group of civil rights, consumer, community development, and housing groups today made the following statement:
Recent conversations pointing to the Community Reinvestment Act as the cause of the foreclosure crisis and credit market crisis are an attempt to deflect attention away from the real problem affecting our financial system. That problem is failed regulatory policy and oversight.
For more than a decade, community leaders, civil rights proponents and housing groups have raised concerns about unfair, deceptive and abusive lending practices that have undermined homeownership aspirations for millions of working families. Those pleas for better regulatory policy and oversight not only went ignored, in some cases they were contradicted by regulatory policy that made predatory lending more virulent and prevalent in low-income neighborhoods and communities of color.
Over that same period, thousands of pages of local, state and federal testimony, peer reviewed policy papers and speeches (many from the groups signed onto this statement) have forewarned of a pending crisis stemming from lax regulatory oversight and enforcement. Yet no serious federal response was made. As Harvard University law professor Elizabeth Warren has artfully stated, consumers had better protection buying a toaster or microwave oven than they had when purchasing the family home.
One example of regulatory failure is that many vital financial institutions – and the products they created and sold -- were not covered by meaningful regulation. Some market players clearly knew their actions were creating a potential market crisis. A Securities and Exchange Commission (SEC) Report recently found that in December of 2006 one analytical manager at a prominent credit rating agency wrote to another senior analytical manager to say “let’s hope we are all wealthy and retired by the time this house of cards falters.”
Improved regulation of the financial system – including brokers, lenders, appraisers, rating agencies and securitizers – was essential. If the Community Reinvestment Act – and other appropriate regulation -- had been applied to independent mortgage companies and other non-bank financial institutions, it is likely that our nation would not be confronted with a foreclosure crisis. Critics of the law conveniently ignore that about 75 percent of sub-prime loans were not covered by CRA. They also ignore the fact that most reckless and damaging subprime lending occurred between 2003 and 2007, long after CRA’s passage in 1977.
CRA exams provide clear and strong incentives for banks to make safe and sound loans and penalize them for making loans that are unfair and abusive. CRA is an antidote, not a cause of the current crisis.
Chicago Tea Party
Rick Santelli Trader Outrage on Live TV - Funny Stuff
cnbc
That is awesome and for the record, I have a pickup truck that can hold an awful lot of that worthless paper.
these guys are just pissed because they can't flip their cribs in downers grove anymore.
These guys are saying it how it is. Most of the subprime mortgages were little or nothing down to the buyer who is only out their monthly payments they managed to make and after months of not paying they're coming out ahead of renting. The bank is out the cost of the house. The banks need to get these people out of their houses as fast as possible and recoup some of the losses before massive failure sets in. The Government has been standing in the way for a year now.
All you broke interns who wonder when you'll ever be able to buy ;listen up; These houses could be yours at decent prices. Go to
hotpads
and check out the blood in the streets. These could be yours if they could get the squatters out.
Well, that was the deal; nothing down and shitty rates. If people walk away then they walk away. If I'm willing to write a mortgage for a five hundred thousand house to someone with no proof of employment and then sell that mortgage to you and you do not do any research on that mortgage and then if you can get some numbnut to insure the loan that you bought from me which you did not do any research on before buying just in case the loans go south and then the insurance company can get bailed out because they didn't research what they were insuring. The fact is every one involved was looking for fast cheap profits. This is what people should be pissed about rather than the fact that some schmoe got a loan he couldn't afford. Getting a loan you can't afford is never an issue when you get it and if all you are losing is your credit rating if you default, well, credit ratings can always be rebuilt with the help of little or no down payment high interest loans and credit cards. Be pissed off at the assholes who created the problem and those who were charged with regulating the industry rather than some yokel who ain't payin the mortgage on his upside dryvit monstrosity inside the gates of cul-de-sac hell...
An aside....
That's the rub. You can buy if you have the down payment. but in our society now the general populace has been weened away from the teet of savings. If you want people to save massive amounts of cash for down payments on big ticket items the economy is not stimulated by credit and got to have it now purchases. and then no one is at home depot, or lowe's buying products to spruce up their low down payment homes or at crate and barrel or pottery barn or target or ikea fillin up their new low down homes with crap and they aren't buying scrapbooking materials to make scrapbooks of the pictures of their little towhead kids playin in the backyard in the above ground pool or on the swingset that they bought on easy installment plans and they have no videos to send to grandma from their video camera that they bought at circuit city and uploaded on their pc and on and on...It's already all over the business news the spin about patriotism and purchasing. Before we weren't saving enough and now we aren't buying enough. Crazy days man. Off to find a hotpad.
Your right, no money down. Cant pay? Then get out!!!
When the revolution starts, I hope the traders in that video are the first ones with their brains splattered all over the pavement.
Those are bond traders trying to guess the futures market of our treasuries and they are seeing them go off a cliff because half this country is a bunch fucking losers - just like Rick said. These guys dont make the rules, those are created by your sub prime ass lov'n Barney Frank muscling Fannie and Freddie to expand the low income home ownership roles in DC and the bullshitters in New York who cut and ran when they closed shop in September. The next step is break the banks by not letting them foreclose and auction these properties and setting a floor, then Pelosi and company can fist fuck every last productive part of the country. In four years the Democrats are going to look even worse than they did in 83. Even the fucking republicans are starting to look intelligent.
And if you want to attack Rick Santelli Hes been an outspoken zealot for the last 5 years along with a lot of Fed Fund traders against the Fed's policies. These guys are the canaries in the mine making the market for short and long term treasuries and they are starting to die.
Evil,
The mortgages are only half the issue. Citibank et al were allowed to securitize these and resell them. They had ZERO incentive to make sure that the mortgagees could pay for them. The people who signed off on them should go to jail. Go into your Countrywide office and start arresting people. Arrest you local B of A branch manager. This is what justice would look like.
These bond traders are not innocents.
I'm still wondering about this...had someone had their eye on the ball and not allowed this housing bubble slash bundled subprime loans bundled and sold again all with sparkling ratings by the way, had all this not happened, would there have been something to crash at all? in other words, was the growth/wealth created in the last few years all just a result of the f'd up policies that are now coming to light?
how big is nancy's fist do you think?
Where were these pussies when Citibank got a$306 billion bailout in November?
Oh, that's ok if we bail out Citibank and the taxpayers get nothing in return but if it's a homeowner, then it's robbery.
http://seekingalpha.com/article/107514-citibank-bailout-300-billion-doesn-t-sound-like-a-lot-anymore
he federal government agreed Sunday to take unprecedented steps to stabilize Citigroup Inc. by moving to guarantee close to $300 billion in troubled assets weighing on the bank's books, according to people familiar with details of the plan.
Treasury has agreed to inject an additional $20 billion in capital into Citigroup under terms of the deal hashed out between the bank, the Treasury Department, the Federal Reserve, and the Federal Deposit Insurance Corp. Treasury officials will charge a higher interest rate for the capital injection -- 8% for the first few years -- than it has charged to dozens of other banks now borrowing money under the government's the $700 billion rescue package approved by Congress last month.
In addition to the capital, Citigroup will have an extremely unusual arrangement in which the government agrees to backstop a roughly $300 billion pool of its assets, containing mortgage-backed securities among other things. Citigroup must absorb the first $37 billion to $40 billion in losses from these assets. If losses extend beyond that level, Treasury will absorb the next $5 billion in losses, followed by the FDIC taking on the next $10 billion in losses. Any losses on these assets beyond that level would be taken by the Fed.
But allowing Citibank to gobble up other banks so that they are so big that you cannot regulate them without imperiling the world financial system is ok?
THEY NEVER SHOULD HAVE BEEN ALLOWED TO SECURITIZE MORTGAGES AND NONE OF THIS WOULD HAVE HAPPENED because they would have made sure that the borrowers could have paid the mortgages.
They shouldn't have been allowed to securitize mortgages and they should go to jail, and the homeowners should be kicked out and the clean banks should be allowed to gobble up the houses and resell them for a profit. One wrong doesn't make another right. But this fix is not a fix, nor does it restore confidence. It simply prolongs the agony.
As for securitization of the mortgages, this was passed by 3 republicans and its still a source of great debate whether the riders Bill Clinton mandated about low income and minority lending quotas under the Community Reinvestment Act and threat of veto derailed this system. Those provisions made certain that any institution wishing to lend in a given city had to supply a quota of low income loans, which kicked into high gear in 2003 after a failed attempt by the republicans in congress:
"In 2003, the Bush administration recommended significant regulatory overhaul of Fannie Mae and Freddie Mac. However, the Democrats opposed that proposal, fearing that tighter regulation could sharply reduce financing for low-income housing, both low and high risk. Under immense lobbying pressure from Fannie Mae in association with Congressional Democrats led by Rep. Barney Frank, the Republican controlled Congress did not introduce any legislation aimed at bringing this proposal into law until 2005.
In 2006, the Federal Housing Enterprise Regulatory Reform Act of 2005 (first put forward by Sen. Chuck Hagel)[15] where he pointed out that Fannie Mae's regulator reported that profits were "illusions deliberately and systematically created by the company's senior management".[16] However, this legislation too met with opposition from both Democrats and Republicans. This bill was passed by the House, but was never presented to the Senate for a vote."
Barney Frank is at the epicenter of this along with Hillary and Geithner. They have protected the relationship between Lehman, Bear, Goldman and Lynch and the Fannie Freddie garbage dump. When the revolution starts its going to be them thats splattered against the wall first.
rose colored glasses
yes i got them on credit at lenscrafters with my lenscrafters credit card only 23 percent apr! woohoo!!!
Poor first-time homeowners who never could have been expected to make mortgage payments or cavalier investors who "flipped" properties to make quick speculative bucks are typical subprime borrowers.
Most subprime borrowers -- nearly 90 percent -- aren't first-time home buyers, and fewer still are the flippers using subprime financing to turn junk bungalows into posh digs on cable TV shows, according to studies by the nonprofit Center for Responsible Lending in Washington.
"These are people who are living in their homes who are really in trouble, not just people who made a bad investment decision," said Center economist Debbie Gruenstein Bocian.
What credit experts call "serial refinancing" by existing homeowners fueled the subprime fire. Because interest rates remained low through the late 1990s and early 2000s -- and residential housing prices kept rising -- homeowners could take advantage of "cash out" re-fi deals that provided progressively larger loans than the value embedded in first mortgages. Borrowers pocketed the difference.
To lure clients, an increasingly larger pool of mortgage brokers took chances on borrowers carrying greater risk of default. Their most tantalizing "teaser" was a no-down-payment loan bearing low initial interest rates that would "adjust" to higher rates and, therefore, higher payments. Most applicants could afford the low starter bills, but if the rate floated higher, many would be put at risk of defaulting.
"Cash out" home equity re-fi's and other subprime loans account today for one-fifth of all outstanding mortgages -- and more than half of all foreclosures, according to the Mortgage Bankers Association's National Delinquency Survey. Although adjustable-rate mortgages make up only 7 percent of the mortgage market, they're tagged to 43 percent of foreclosures.
"Here's the way these things were sold: People got phone calls that said, 'I'm going to lower your monthly bills by $300 and you can use that to pay off your credit card bills, or pay off your medical bills. Come in and sign the paperwork.' People assumed they were getting a good deal, because interest rates were going down and no one told them that the loan would re-set and they could lose their homes," said Bocian.
my wife and i bought our home with an 80/20 mortgage 6% on the 80 and a 5% or so variable on the 20. our property value has gone from 229,000 to 179,000 - by the property tax estimate - and i, being an architect, am somewhat concerned about my income. now, because my home is underwater, should i not go after the program that the govt has put out?
you conservatives crack me up. well if you want class warfare, it's coming, just you wait, when your neighbors stop paying their mortgages and the "troops" start coming to evict, you suburbanites will be living in the new ghettos.
WASHINGTON — As the economy worsens and Election Day approaches, a conservative campaign that blames the global financial crisis on a government push to make housing more affordable to lower-class Americans has taken off on talk radio and e-mail.
Commentators say that's what triggered the stock market meltdown and the freeze on credit. They've specifically targeted the mortgage finance giants Fannie Mae and Freddie Mac, which the federal government seized on Sept. 6, contending that lending to poor and minority Americans caused Fannie's and Freddie's financial problems.
Federal housing data reveal that the charges aren't true, and that the private sector, not the government or government-backed companies, was behind the soaring subprime lending at the core of the crisis.
Subprime lending offered high-cost loans to the weakest borrowers during the housing boom that lasted from 2001 to 2007. Subprime lending was at its height from 2004 to 2006.
Federal Reserve Board data show that:
* More than 84 percent of the subprime mortgages in 2006 were issued by private lending institutions.
* Private firms made nearly 83 percent of the subprime loans to low- and moderate-income borrowers that year.
* Only one of the top 25 subprime lenders in 2006 was directly subject to the housing law that's being lambasted by conservative critics.
The "turmoil in financial markets clearly was triggered by a dramatic weakening of underwriting standards for U.S. subprime mortgages, beginning in late 2004 and extending into 2007," the President's Working Group on Financial Markets reported Friday.
Conservative critics claim that the Clinton administration pushed Fannie Mae and Freddie Mac to make home ownership more available to riskier borrowers with little concern for their ability to pay the mortgages.
I'd like to see Alan Greenspan as the first one to be tarred and feathered. The Federal Reserve is the biggest culpurit. Yes, politicians threw gasoline on the fire no doubt, but the Fed is the one that manipulates markets.
It was Greenspan that lowered interest rates after 9/11 to ridiculous levels which started the whole housing asset bubble.
It was Greenspan which fueld a great M3 monetary inflation during the 90's which fueled a dot com asset bubble. (Layman call it a Clinton economy but good economists know who has the real power.)
Now Bernanke is in charge and out of options to reinflate the economy outside of monetizing the debt. Read your history about the Weirmar Republic. This is going to make 1970's inflation look like a cake walk.
Why we give power like this to an unelected official is beyond me. My suggestion is to buy gold.
Don't waste your breath with facts, beta. It's like trying to reason with a rabid dog.
If Rush Limbaugh went on the air and said the sun rises in the west, you can be sure all his brainless dittoheads would be hitting internet message boards claiming it to be true.
Everything you posted is true Beta, private banks lent the money and originated the loans. Why? Because the back market was created for them to dump them - Fannie / Freddie. No risk for the bank. They just got the fee. Why couldnt the banks hold the note themselves? They wouldnt in a million years make such a loan if it was their money at risk. All the banks did was originate the loan, essentialy the sale force for Fannie and Fredddie. A big part of the reason BAC and Citi are in trouble is that they were on the back end of buying these CDS packages whereas your typ suburban bank and trust just got a fee and has no risk. They are hurting more because of local businesses downturning and lack of deposites.
Beta I ask you on your house, why did you take out an 80/20 rather than a 30 yr fixed? Could you not afford the fixed? Might you have biting off more than you could handle then? No offense but that was your poor decision not mine and Im not paying for it. Wait it out until values come back or take the loss but dont spout off bout "class warfare". under 10% of the mortgages are underwater meaning if theres a "war" I think us 90% would make it a quick one.
beta - by saying you have an 80/20 loan does that mean you put zero downpayment at time of purchase? Since you claim to be underwater you could theoretically just walk and just take the hit on your credit rating. Write off those mortgage payments as "rent."
The problem is with zero down type mortgages the buyer has no skin in the game. Historically people had to have minimum 20% down to get a loan. That protected the lender from a reasonable amount of asset deflation. Going from 229 to 179 is just a fraction over 20% loss. Under that scenario if you were foreclosed on, for one you'd be out $50k, but the lender would be out very little.
I don't blame you for doing a piggyback loan. Had to do the same thing myself with an 80/10/10 primarily because home prices were so inflated that it was impossible to save that 20% down payment. So I did have a "subprime" mortgage. High interest with balloon payment. Spent several years paying that bastard down and now have over 20% equity given my original purchase price. My home has lost value too, but I sure as shit ain't walking on my $50k.
LIG is your typical delusional liberal - it sounds cool and makes them feel cool, like owning an ipod its a badge of trendiness which makes them more dangerous than the supposed right wing nuts he's always accusing people of being - and LIG Ive never once even heard Rush speak and think hes rather a pig from what Ive seen of him on TV.
These people arent progresives, their not smart - they are angry. Angry they suck, jealous of others - its a movement of channeled anger and hate and they invest their emotional energy is demigods and celebrities who are far worse in their back room dealings than any of the "wing nuts" they claim to be against.
How about Obama's backroom deal to funnel tax payer money to private hedgefunds in Chicago and New York? Awesome!!
"The Obama administration hopes to jump-start this crucial machinery by effectively subsidizing the profits of big private investment firms in the bond markets. The Treasury Department and the Federal Reserve plan to spend as much as $1 trillion to provide low-cost loans and guarantees to hedge funds and private equity firms that buy securities backed by consumer and business loans.
The program also does not try to change securitization practices that, many investors say, spread risks throughout the world and destroyed financial institutions. Policy makers acknowledge that for now, fixing credit ratings, reducing conflicts of interest and improving disclosure can wait.
Under the program, the Fed will lend to investors who acquire new securities backed by auto loans, credit card balances, student loans and small-business loans at rates ranging from roughly 1.5 percent to 3 percent.
Depending on the type of security they are borrowing against, investors will be able to borrow 84 percent to 95 percent of the face value of the bonds. Investors would not be liable for any losses beyond the 5 percent to 16 percent equity that they retain in the investment. "
See - He's the same as the last guy retards except your too fucking stupid to see it. Hedge Funds were his biggest corporate contributers and also a big part of the packaging of the CDS market and now they're getting their payback.
we could fix the 20 no problem, and take on another 200 in mortgage payments a month, our debt to income is around 29% our credit card debt is low, and our two car loans, with one finishing up this year. we are not in the sub-prime category. we kept the 20 adjustable thinking that the rate would drop, and it has. we did the 80/20 to avoid PMI.
the fact that my home is underwater has nothing to do with me or my loan, it has to do with rampant speculators, and their lust for money.
here's the thing about your logic EP, the 10% can fuck your world so fast you wouldn't know what hit you. if the 10 started leaving empty homes, then the criminals come in and steal the copper, then the crack addicts move in and squat, then your former neighbor's home explodes, well, that 10% is long gone and your "comfortable" ghetto palace is that much lonelier.
besides if you really think you whitebread conservatives can handle streetminded knuckle draggers like me, well, lets just say i don't much sand kicked in my face before i get all medieval.
Thanks for proving my point about ignorant, hate filled left wing lunatics such as your self who have the audacity to think I live in a nice white bread suburban bedroom comunity and make sweeping generalisations about "my world". You clowns want a revolution -
So if your payments arent a problem, and you could afford more debt, then why would you take a handout? Suck it up for a couple years until prices come back. From 76-84 home prices were flat. Our grandparents and parents didnt say Gee Im losing eqity, someone make up the difference.
Be careful, beta. EP cut his teeth in the mean streets of DuPage County, and now lives in a high-rise on Chicago's rough-and-tumble Near North Side. He's one bad motha fucka, and I'm sure he wouldn't piss his pants if some sort of civil unrest actually did break out and his doorman wasn't able to hold back the tide.
It's his Libertarian buddies I'm more concerned about. When they perceive that somebody less deserving than them is getting a slice of the pie, they tend to do things like this:
That's the core of Libertarianism: "I've spent my life sucking what I can from society, but fuck you if you try to get a morsel for yourself."
Unlike EP, at least McVeigh and Nichols actually have the balls to put Libertarian ideology into action. I'm sure EP is happy to stand on the sidelines and cheer, though, as long as he doesn't get his hands too dirty.
from today's wall street journal: 'if this crisis proves nothing else, it proves you cannot help people by lending them more money than they can pay back'
is being able to refinance a handout? i must have missed something. so, i, like those "principled" republican governors, should bitch and moan about the plans, posture and threaten not to take the stimulus and then take it anyway? how about i don't bitch about it, and still take the $$ and save my breath.
76-84 home values were flat, but they were not cratering. believe me, i want to suck it up, i like the money i pay for my home. we couldn't afford to buy a home in jersey, now we can. we make total over 100k a year. more than able to afford it, but here's my point; until i am on my own - if ever - i am, like most here, working hard and praying that tomorrow i still have a job.
oh, and i certainly don't sweat whitebread republicans, not today, not yesterday and not tomorrow.
this kid grew up poor, and knows what it's like to have to work hard or see a single mother work 20 hours a day to put food on the table for 4 kids.
Congratulations, step over hear for your hardluck handout. I had 2 parents and who had a small business and had clean construction sites at 5 years old, no heat sometimes and my grandparents were burned out of their house on the west side which is how we got to DuPage. I dont give a fuck about your pain, your poverty, race or martgage.
waaa.
fuck you cunt.
Pay your bills deadbeat
i dont care about you loser parents, as far as i'm concerned your dad probably dodged the draft, and your grandparents lived off the back of other people. i certainly don't give two shits about you and your rummaging through construction sites.
eat my ass you loser cunt.
Thats the problem with you deadbeats - you think your the only ones who ever had it bad when it more that you cant do do anything about it except burn your neighborhoods, shoot each other and cry for handouts.
yeah and republican douche bags like you lie us into a war, and expect me the tax payer to fund it. cocksuckers.
seeing as how i pay my bills, and my mortgage, i think i will take that money. just so i can say EP is funding me, that way i can feel like a real republican fat cat.
Im actualy a registered democrat with common sense enough to know theres 2 sides to everything and balls enough to call bullshit on liberal board
lying shit for brains republicans, you can all suck at the altar of Reagan, and go choke yourselves.
If you should be allowed to refi at the government cheese rate then everyone should - it would be for the good of the collective after all.
you're full of shit.
Why? Because right now theres some 2+ million refis going on who are going to screwed if Obama decides underwater people should get a special 3% rate? Fuck that. Thats penalising the thrifty at the exspense of the thrifty.
all mortgages are subsidies, regardless of who takes it out, or how poor or wealthy they are. unless you are paying cash for your home, you are getting a hand out.
so when people were told they could refi their home, to pay off credit or go on trips - back when times were good - weren't they free loading?
Yes - fuck them to. I havent gone on a vacation in 10 years. Ive never had a credit card balance EVER and no debt besides a very managable mortgae. The rest of you can fucking go to debtors prison for all I care.
let's not forget one simple thing; if a small % of the loans are the problem, then how did we end up here? we are here because of the 30-1, 40-1, 100-1 leveraging, CDS and MBS.
what, you want a medal now too. i guess you don't have a car loan, don't have student loans, and pay cash for everything. i guess you have money in the bank, or did, and your 401k, i mean 201k, is now in the shitter. i am sure you don't have your money in any of the zombie banks too, or any bank that is getting bailed out...
wow, you mean i subsidized your mortgage??
Ive never had a 401K because its a scam, I have all my money in a zombie bank which is a zombie bank because they arent selling off the Non performing assets (Yet ) and the bailouts are investments to be paid back as government is priority shareholders.
Look the government has to say get out of these houses now, and banks start auctioning them off! Until that happens, nothing happens.
I took a traditional 30 year fixed with 30% down from a local bank since eaten up - it was held by the bank of orginiation so its not subsidised
Washington, DC – The following group of civil rights, consumer, community development, and housing groups today made the following statement:
Recent conversations pointing to the Community Reinvestment Act as the cause of the foreclosure crisis and credit market crisis are an attempt to deflect attention away from the real problem affecting our financial system. That problem is failed regulatory policy and oversight.
For more than a decade, community leaders, civil rights proponents and housing groups have raised concerns about unfair, deceptive and abusive lending practices that have undermined homeownership aspirations for millions of working families. Those pleas for better regulatory policy and oversight not only went ignored, in some cases they were contradicted by regulatory policy that made predatory lending more virulent and prevalent in low-income neighborhoods and communities of color.
Over that same period, thousands of pages of local, state and federal testimony, peer reviewed policy papers and speeches (many from the groups signed onto this statement) have forewarned of a pending crisis stemming from lax regulatory oversight and enforcement. Yet no serious federal response was made. As Harvard University law professor Elizabeth Warren has artfully stated, consumers had better protection buying a toaster or microwave oven than they had when purchasing the family home.
One example of regulatory failure is that many vital financial institutions – and the products they created and sold -- were not covered by meaningful regulation. Some market players clearly knew their actions were creating a potential market crisis. A Securities and Exchange Commission (SEC) Report recently found that in December of 2006 one analytical manager at a prominent credit rating agency wrote to another senior analytical manager to say “let’s hope we are all wealthy and retired by the time this house of cards falters.”
Improved regulation of the financial system – including brokers, lenders, appraisers, rating agencies and securitizers – was essential. If the Community Reinvestment Act – and other appropriate regulation -- had been applied to independent mortgage companies and other non-bank financial institutions, it is likely that our nation would not be confronted with a foreclosure crisis. Critics of the law conveniently ignore that about 75 percent of sub-prime loans were not covered by CRA. They also ignore the fact that most reckless and damaging subprime lending occurred between 2003 and 2007, long after CRA’s passage in 1977.
CRA exams provide clear and strong incentives for banks to make safe and sound loans and penalize them for making loans that are unfair and abusive. CRA is an antidote, not a cause of the current crisis.
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