Skip to comments.Have lying mortgage bankers met their match?
Posted on 05/05/2011 7:44:03 AM PDT by Chunga85
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I’m jumping into the middle of the conversation you have been having here, so not directly related to a specific post. Just raising a point.
I’ve a few friends that have walked from their home loans. Not one of them can be characterized as getting a loan they could not afford. They had good steady jobs with loan amounts that did not have them over their heads.
They lost their good paying jobs and income. All but one had savings that could have carried them for awhile in the house. It became a business decision for them to walk.
They looked a house that was worth half what they owed. Another house that was just as nice was available for rent at less than half what their mortgage payment was. Why not walk? Why shouldn’t they?
Heck, why not go rob some liquor stores? They have cash around, booze too... so why not?
Because that would be against the rules.
Don't count me as one of them. The directors of the banks (and the rating companies like S&P and Moodys) should be in jail for the harm they have perptrated on this country. Instead they are getting record bonuses. It is called corruption. They should be in jail.
The skilled, knowledgeable "licensed" loan givers were duped by the stupid borrowers!
What the H!
Not saying there is no fraud by borrower, but they really need to give it a rest.
Loan GIVERS were prospecting potential borrowers like great white sharks at a luau.
Loan companies and banks told borrowers whatever they needed to hear to get them to sign on the bottom line.... some borrowers were ignorant of the fraud and some were aware (i.e., illegals... a la my former Xneighbor.. illegal who moved out in the middle of the night... of course he sent a car carrier truck to remove all of his new vehicles about a month before that).
If you want to deny that the government under Carter and then Clinton forced banks to lend to folks they did not want to, then go ahead and join ACORN and the DNC and MSNBC and the ....
You are echoing Rush Limbaughs infantile grasp of the situation ,, have you read any news in the last 4 years or so? How about any actual court transcripts or depositions ,, the fraud is everywhere , it was planned , the deals were designed to crash and burn because the banksters had “crash and burn” insurance in spades .. You are either a troll or you’re being played.
American Thinker Columnist / Rush ghost contributor
I apologize ,, I hadn’t read your tagline ,, you aren’t echoing Rush’s infantile understanding of what occurred ,, you provide him with your understanding and he is silly enough to go with it ... Pathetic ... Rush needs schooling on this subject more than any other ,, whenever it comes up it makes me cringe knowing that he should be doing a “face palm” ... Go tell the golfer that he needs to have ICE LEGAL send someone over (they’re right in Rush’s neighborhood) and ‘splain it all to him ... because this is far out of your league.
Do you know who currently holds them all?
If not, good luck in getting clear title once you've paid them off.
They’ll always be a certain ilk that will forgive criminal behavior if committed by the “right” kind of people against the “wrong” kind of people.
What I think it's really all about is this:
Back when I was a kid, and even when I bought my first house in the '80s, making a mortgage was all about the borrower. Did the borrower have the income and sound financial history to make the loan a good investment for the bank?
Sometime about 10-12 years ago, the mortgage became less and less about the borrower and more about the house. The rise in the value of the collateral (after all, "Housing Always Goes Up") would ensure the viability of the loan regardless of borrower conduct.
This went hand in hand with the change in the mortgage industry's business model. Where mortgage companies historically relied upon the income streams from held mortgages, by the early 2000's this had largely been replaced by one-time origination and processing fees, which were followed immediately by flogging the note off to some successor purchaser.
One did not have to be a financial genius to see this was the road to disaster. I sold my house in 2006 for $450,000, you could probably buy it for half that amount today. And believe me, I'm no genius. I'm just smart enough not to drink the asset bubble Kool-Aid.
And yes, the CRA and its Democrat backers had something to do with this. But not all of it by a long shot. The willful blindness of the early 2000's was one hundred percent bipartisan.
I agree with almost everything you said and you laid out how the industry morphed very well. I would only say that the CRA forced the industry to make bad loans.
Being forced to do that, they did some very unsavory things with regard to packaging and re selling the mortgages on Wall Street. It was like OK government, if you make us do bad loans through your threats, we’ll figure out a way to “sub out” the risk.
The net effect of this was to separate the ultimate risk from the original lender. With this separation, the banks and underwriters who made the loans were following guidelines simply designed to make the loans sellable in bulk.
I know some mortgage brokers who really did think prices would keep going up and nothing would happen.
At the bottom though was government perversion of the market place through the CRA and other subtle pressures on folks to put people in homes regardless. That was the first domino, and the other unsavory domino’s would not have fallen without that one IMO.
‘So someone makes a bad financial move and fails to honor a civil contract is the same as a financial institution failing to do their do diligence and keep their paperwork straight’
No, its not the same according to many people. The only problem is the borrower. For whatever reason these people refuse to believe the banks did anything wrong. The banks are the victims ya know.
“They looked a house that was worth half what they owed. Another house that was just as nice was available for rent at less than half what their mortgage payment was. Why not walk? Why shouldnt they?”
Banks walk away from bad investments ALL THE TIME.
The only parties who I believe are truly criminal are the ratings agencies, who would label a cow pie as "AAA" if they were sufficiently incentivized.
Note how they have gotten a complete mulligan.
I would agree with you on the rating agencies. I forgot to mention them, but they clearly played one of the biggest roles, especially as the home values started to come down and they continued to rate risk AAA.
“and understand NOTHING about the mortgage industry.”
Yeah, see when the owner defaults the bank should be allowed to:
1) Retain the borrower’s obligation for payment.
1) Receive taxpayer bailout for the “loss”.
2) And keep the note!
Seems pretty clear whose victimology you’re representing.
TARP was, um, a LOAN. Not defending it mind you, just trying to bring in a little perspective. With the exception of Fannie, Freddie and GMAC, most of the original TARP loans to banks have been paid off at a high interest rate.
I simply want the true picture, and the main culprit here is government intervention into the market through the CRA and veiled threats by Janet Reno while Clinton was in office to lenders. Not at all supporting any fraudulent activities. I still don’t believe the fraud piece is the statistically significant piece of this problem, and I am not minimizing the problem anyone has who was a victim of fraud.
So on your list, 1 and 3 are essentially the same and 2 is a loan not a gift. There’s still no way a bank loans 400 K on a mortgage and then wins by taking a repo that is only worth 250 K now. The idea that the did this on purpose to lose 20-50% of what they lent out makes no sense whatsoever.
Wow, stunning ignorance. Do you know what Collateralized Debt Obligation (CDO) is?
Do you understand how banks instantaneously recouped the 'mortgage' by securitizing them (MBS)?(in some cases before the loan was closed - fraud; in some cases using the same MBS in multiple CDOs - fraud; in some cases lying about the credit worthiness of the buyer to rate the MBS / CDO as AAA - fraud)
Do you get how the same banks bet against their fraudulently rated MBSs and CDOs using Credit Default Swaps (CDS)? Do you know there is no regulation of CDSs and banks can bet unlimitted CDSs against their fraudulently created CDOs and MBSs?
It's funny how you're stuck in the paradigm of a bank making a loan with their own money, and keeping it in a loan portfolio. That's less than 4% of loans in the US... but you're an 'expert'. LOL!!!!!!!!
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