This article is kind of a dog’s breakfast.
Just a nation of victims, we are.
Even if you're illiterate and don't understand the meaning of the word "adjustible", all you have to remember is the folksy aphorism "If something seems too good to be true, it usually is."
Great idea. After all, they are guaranteed to be completely impartial and have absolutely no motivation to lie to get back at their former employers.
Let's face facts: plenty of people borrowed more money than they should have and plenty of banks lent unworthy creditors more money than they should have.
This isn't criminal activity - this is simply a large group of people getting carried away and making poor financial decisions.
You can stop reading right here.
L
Milken got in trouble for selling high yield bonds too profitably. I wish I was joking, but that is literally what happened. He sold bonds to buyers who were not forced to buy them and who freely agreed to pay the selling price.
Kozlowski stole money from the company of which he was CEO.
What Milken's shrewd trading and Kozlowski's theft have to to do with subprime mortgages, I have no idea.
I’m not up to speed on derivatives but understand they could present a serious problem in our financial system.
The suthor of this article has no idea what he's talking about. The first major mortgage bonds (collateralized mortgage obligations, or CMOs) were developed back in the 1980s to address a basic inefficiency in our nation's banking system -- i.e., the imbalance between banks in older regions like the Northeast and Rust Belt that had a lot of cash but were underwriting fewer mortgages and banks in fast-growing regions like the Southeast and West that had small cash reserves but a lot of demand for new mortgages.
A Real Estate expert explained this to me this way:
“Not too many years ago, if you borrowed money to buy a house or a car, you visited your local bank. Assuming you were approved, the money came from your bank and the follow-up (the “servicing”) was handled by that same bank. If you had a problem, you knew who you could speak with and where to find him or her. The system worked pretty well. But only greed could cause a seemingly good system to go awry. And the heart of all greediness is Wall Street, of course.
Realizing that these loans were a good investment for the banks, Wall Street decided to figure out how to take a piece of the pie.
Translation: this unnamed "real estate expert" is angry because real estate lending was once a largely-closed shop with little competition. He enjoyed having a near-monopoly in which customers had few choices in borrowing. He loved selling 15% mortgages back in the 1970s.
Then evil Wall Street types got involved, confused consumers with all these different options, and the fat mortgage margins he enjoyed fell as consumers were deceived into paying only 6 or 7 or 8% on their mortgage instead of twice as much.
Is the author Danny Schechter your “News Dissector” from the old WBCN-FM In Boston, MA?
I was not in default and had all the documents to prove it. After one year of the mortgage company’s refusal to correct their accounting errors, I was forced to file a law suit to protect my home from an illegal foreclosure.
For the next seven (7) years (costing me more than $2 million in legal expenses and lost wages), I watched the court[s] repeatedly grant judgments in favor of the mortgage companies. These errant judgments were granted without either mortgage company presenting a scintilla of evidence to support their allegations and in stark contrast to my preponderance of evidence and material facts."
He spent $2 MILLION in legal fees? How much was his house worth? And if the courts truly ignored his mortgage payment receipts, he should have hired better lawyers. There's something more to this case than one man being abused by "the system."
The definition of predatory lending to me is bilking elderly people out of the remainder of their lifesavings - people who genuinely, by their advanced age and declining faculties, are taken advantage of.
But the vast majority of “suckers” are simply people who got greedy and couldn’t say “no” to instant gratification. When my wife and I bought our first house, not many years ago, we took a 30-yr fix at 6.0%. According to our various friends and colleagues, we were nuts for not getting an ARM at about a percentage point lower. Ultimately, to us, it wasn’t about scalping a percentage point for a few years and refinancing later on. It was about looking at an historically excellent fixed rate, with a payment we could afford, and knowing that we would never have to worry about unforseen problems in the marketplace. Knowing we would be able to sleep at night, regardless, was worth the extra point we would be paying in interest. It was simply good enough for us.
When we went to the closing, at the title office - I’ll never forget this - the Realtors and title officer sat in utter amazement as we actually READ the terms of the mortgage contract. They told us, “no one ever reads these contracts.” My wife and I were just like, “you’re kidding right?” They said they weren’t. People just sign away. I said, “So people are committing to massive amounts of debt without reading the fine print? Are people that stupid?” Their response was silence.
Just amazing. People inevitably make their own beds. A scant few are legitimately screwed by criminal elements, but too many people have their head in the clouds and got what was inevitable.
What about the people who lied about their income?
John
Seriously, tell the truth now. Is this satire?
“In the Bush years, tax cuts are going to the rich while the IRS is browbeating the middle class.”
I knew it would end up being Bush’s fault!
freshcarrion; vulturegram
Boy I hope you don’t believe any of the slop this guy’s selling...
Yet this is all so true. FOLLOW THE MONEY. So many charlatans, extrememly well represented here on FR btw, made fortunes on this ponzi scheme. True the morons they used should and will pay the price of their stupidity, but the greedy abusers should have their miserable coiffed, contempible heads on pikes at the gates of Ron Reagans shining city on the hill. Same schiesh different tage