One thing is very simple though. Don’t buy what you cannot afford. Oh so simple.
Of course not EVERYONE who is going through foreclosure brought beyond their ability to pay, but huge numbers of those that foreclosed absolutely did. And they knew it.
What are “MBS” and MERS”?
I am not into the fine print of all that goes on in these bad mortgages being bundled and sold, etc, but I do know that common sense people would not buy what they can’t pay for. And get a solution BEFORE you get in deep trouble if you lose your job.
The government orchestrated this mess, and the “wantabee fabulous” buyers didn’t care that they couldn’t hold up their end of the deal. I have no sympathy for them at all. They willingly signed deals that they could not pay for - they knew that.
Then you will agree the banks should have been allowed to fail, but they didn’t did they? Can you say moral hazard? That moral hazard is the excuse for the OccupyWall street aging hippie crowd, eh?
MBS? MERS?
MBS is the idea that one bad loan is not good, but a whole bunch of bad loans mixed in with a few good loans, why, that is AAA rated good stuff. So good, it was sold to pensions and retirements funds, and these great deals poplulate and fill the worlds banks. They are the reason BearStearns fell. They are the reason Lehmans fell. In a variation it is also why Dexia was nationalized in Europe over the weekend. It is also why Greece is going to default and eventually, so will the USA will default, because the banks thought bundling these bad loans was such a good idea.
Then they decided that they should get bonuses based on those bad MBS bundles. And that the US tax payer should pay for it because Lehman fell.
And MERS? MERS was another great idea. See, they sold these bundles so much and made so much money doing it, they didn’t want to pay for the recording fees of peoples home titles. So they didn’t. MERS was made to bypass those fees. But it was outside law, and has no standing. So, the few honest people when they wanted to negotiate with their bank, couldn’t. Because nobody knew who own their mortgage. Great, eh?
Did you know that the banks have CDS (kind of MBS’s) that in totally value equal to 300billion of notes out there? Bigger than the world’s GDP? And nobody is touching that mess? They keep trying to pretend it away. And they made up all this stuff, and make bets on it, and if they lose, we pay, and if they win, they keep it.
So, blame all you want on those misguided fools at the end of the game who really were tempted and sold lies. Like the banks were totally clueless and blamless.