Posted on 10/11/2008 10:09:12 PM PDT by RushingWater
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.
(Excerpt) Read more at mcclatchydc.com ...
The number of foreclosures are concentrated in about five states: California, Arizona, Florida, North Carolina, and [Nevada?]. I see foreclosures all over the place here in Fresno. It’s sad.
THIS IS A TOTAL LOAD OF BULL HOCKEY!
Plus, banks have only a few investment opportunities and many of them bought stock in the FMs. The failure of the GSEs wiped out a lot of assets on the banks’ books, and now they are overleveraged.
Most of these mortgages were created by sleazy “sub-prime” shops that made really bizarre mortgages, bundled them and sold them to banks, who bought them because no one really cared during the housing boom because everything was going up in value by the day.
The people running these subprime shops were like the housing equivalent of a sleazy used car salesman, and many of them made a quick fortune and closed up shop. They were everywhere a couple years ago.
actually, the author is right on a lot of things. These mortgages were mostly created in “sub-prime” shops-—weird little places that popped up like mushrooms during the housing boom. They were sordid little places that made the loan, bagged the closing costs and then sold these mortgage time bombs to banks as quick as possible.
The lies by these Lefties are outright stunning! Folks, private organizations like banks, savings banks and mortgage companies ORIGINATE mortgage loans. But... over 85% of these loans are sold to Fanny and Freddie.
Where do Fanny and Freddie get the money to buy these loans? They sell bonds to stupid Swiss bankers at UBS (and other banks, too). They sell the bonds to the banks and use the proceeds to buy the crappy mortgages from the mortgage originating banks, savings banks and mortgage companies.
If people are ignorant of the facts, they will believe this story without understanding the truth. IGNORANCE MAY BE BLISS, BUT IT IS ALS FATAL! WAKE UP!!!
well, the fact that banking law was changed and they could spend 40$ for every 1$ they kept as insurance turned out to be not so good for long term stability.
No, the loans were sold, almost before they were written, to Fannie and Freddie and were "encouraged" under threat of legal action in federal courts.
My daughter is a VP for a company in this industry.
She says... If banks make loans that do not meet the Freddy/Fanny criteria, they can not sell the paper.
So this whole mcclatchydc.com thing is BS... (that’s not her speaking - It’s me)
The people running these subprime shops were like the housing equivalent of a sleazy used car salesman, and many of them made a quick fortune and closed up shop. They were everywhere a couple years ago.”
Spot on. But, you missed one step. The mortgage loan originators sold the mortgage loans to Freddie and Fanny and made an origination fee. Freddie and Fanny sold bonds to the banks and other investors and used the proceeds from the bond sale to buy the mortgages from the originators. Thus, Freddie and Fanny hold over 85% of the originated loans. This story is a lie and intended to deceive people who don;t understand how the mortgage market works. DON'T BE FOOLED!
Fannie & Freddie guaranteed these loans didn't they? If the banks didn't make these sub-prime loans they were sued by lawyers like Obama for red-lining.
Spot on! Its the credit swaps. The Fed has already committed more new money than all of the outstanding sub-prime mortgages. If you research the swaps, you'll puke. Greed beyond comprehension from the Wall Street Five! Seems every bank in the world has drunk the Kool-aid and is now stuck with worthless swaps! Like handing our free coke in every drug rehab house in the world.
Wow! How amazingly like this election!
She says... If banks make loans that do not meet the Freddy/Fanny criteria, they can not sell the paper.
So this whole mcclatchydc.com thing is BS... (that’s not her speaking - It’s me)”
Absolutely correct. Fanny and Freddie buy over 85% of the mortgages originated in this country. Sub-prime and prime. No bank or mortgage company would write a loan unless they could sell it to F or F. If they can't sell it, they are stuck with it “in the vault.” The originators won't take that risk. So they only write loans they can sell.
This story is a pack of lies designed to mislead ignorant people and get them to vote for the Messiah! IGNORANCE IS NOT FREE!
What I understand is this:
These mortgages were bundled with other mortgages so there were maybe some bad along with good ones, and this was then sold as a package to someone like Lehman, etc. who resold them to clients. Then, trying to assuage any worry the client might have, Lehman (or whoever) sold what was basically insurance to the client guaranteeing the safety of the package. This insurance was a self-insurance by the banker. So it became a double whammy when the securities started not being worth what everyone thought.
The other problem was that since these were bundled, no one could tell exactly where the rot was so the whole package became unwanted and therefore worth very little.
This is basically what I learned from reading about what 60 minutes had to say about this last week.
“Fannie & Freddie guaranteed these loans didn’t they? “
Freddie and Fannie actually buy these loans from the originators (not guarantee them). And Freddie and Fanny sell bonds to Swiss and other dumb bankers (all of whom were seen whining in Washington earlier today) to raise money to buy these loans.
Call it what you will. Fannie and Freddie got left holding wothless paper in their portfolio until it buried them and this was all encouraged by Barney Franks, Chris Dodd and Obama himself. McCain tried to pass a bill in 2005 and the RATS all voted NO. Might have saved us from this present crisis too.
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