Why are the loan recipients victims?
Here’s why?
That $1,000,000 the young couple borrowed to buy the 1100 sf fixer bungalow in San Francisco in 2005 was said to them to be a very good price and that the old house had lots of ‘potential’. And then they were told that the price tag was not important as they could get a 2% 5 year loan and qualify. Then at the end of 5 years they would have equity because of rising prices and they could refinance again at a low rate or else sell for a profit.
Yes those young couples were foolish but they were young and inexperienced and they were being led over the cliff by some smooth talking mortgage brokers who were actually put in every corner of America to peddle million dollar fixers by Wall St. bankers (see below).
What was happening behind the scenes is that loan underwriters were no longer underwriting the borrowers but were instead underwriting the property and its future value. That was insane.
And the reason that the teaser loans existed, that the underwriters were compelled to go lax and mortgage brokers were saturating the streets and businesses of America is because Wall St. Bankers had forward-sold bundles of financial notes called Mortgage backed securities MBS with disguised fake insurance called Credit Default Swaps CDS derivatives, AND THE MOST EGREGIOUS PARTS OF THIS SCHEME WERE THAT:
(1) THE BANKERS ADVERTISED THE FINANCIAL NOTES WERE BACKED BY DEEDS OF TRUST WHEN IN FACT THE DEEDS HAD BEEN DECOUPLED FROM THE NOTES BY PLACING THEM IN ‘TRUST POOLS’ WITHOUT PROPER ASSIGNMENTS AND RECORDINGS LEAVING THE NOTES UNSECURED, AND
(2) THE BANKERS LISTED LOAN HOLDERS ON A SPREADSHEET ATTACHED TO EACH MBS CERTIFICATE WITH NAMES, ADDRESSES. LOAN AMOUNTS AND CREDIT RATINGS AND.........
AND ........GET READY
AND ........
THE LOAN HOLDERS LISTED ON THE ATTACHED MBS SPREADSHEETS HAD FAKE NAMES AND ADDRESSES!!!!!!!!
SO THE BANKERS TOOK INVESTOR’S MONEY FOR THE MBS AND THEN USED THE MONEY TO HIRE AN ARMY OF LOAN BROKERS AND MORTGAGE BROKERS TO COVER THE COUNTRYSIDE TO SIGN UP YOUNG INEXPERIENCED GULLIBLE COUPLES TO BACK UP THE FICTIONAL SPREADSHEETS OF LOAN RECIPIENTS SO THEY COULD LATER CLAIM HARMLESS ERROR OR CHANGE IN OWNERSHIPS ETC.
So on the one hand you have naive ignorant homebuyers who were told the high price of the homes they saw everywhere was normal market trending and that real estate only moved up up up.......
And on the other hand you have bankers who were always aware of their own deceit and misleadings that orchestrated the entire scam.
So if you blame the naive and gullible and ignore the crooks that created the scam, you might do better in certain parts of Mexico.
To recap, you are advocating that the people that need shelter and who want to build up equity in their home nestegg for the future should be blamed when they have no real low cost alternatives in the City where they work....
and that the sales and finance people that say “yes the price is high but....we have a ‘financial’ product for you that will let you get into that home yada yada yada ....”, that these reckless sales and finance people should walk around free without worrying about spending one day in jail ....
People need a roof and people like to get ahead. Should they be blamed for listening to official ‘professional’ people that are roping them into a massive fraud?
Go ahead and blame the so-called victims but try and focus also on the real crooks that are behind the greatest heist in history.
The "young couple" are just as big crooks as anyone else in the scheme.
They borrowed money that was way beyond what they could afford. It's not rocket science to know they couldn't afford it, it was just greed.
If people are greedy and get burned, they should bear that cost. If they got the $1 million mortgage and bet on housing prices always going up, up, up, and made a bunch of money, are they going to share some of that money with folks like me who pay taxes and live within our means? No.
And now they are saying "Obama you need to give me some of your stash" from wherever he gets that stash (taxpayers like me who live within our means).
Why isn't the person who buys the crack guilty, and not just the "smooth-talking" crack dealer who sold it to them?
The bankers and lawyers who illegally recorded mortgages or who illegally created fictitious borrowers are certainly guilty, but they are NOWHERE NEAR the majority of the problem. What they did is called "fraud" and we have laws on the books against it, and the books should be thrown at them.
But the majority of the housing bubble crisis is not from those subsets, it is from the destruction of sound underwriting standards that served the market well for many decades (high down payments and limiting monthly loan service to a reasonable % of income) by ACORN, Fannie, Freddie, Dodd, Frank and the usual suspects of social engineers combined with an environment of easy money and rising home prices that allowed the phenomenon to continue and continue and continue without a correction until it had grown into a giant bubble.
The rating agencies that gave mortgage-backed securities high ratings were for the most part not engaging in fraud, but stupidity. This has been dissected in detail in the financial press and the stupidity of the diversification they thought were achieving in these portfolios because of ignorance of true correlation factors.
But it all starts with the creation of the crap in the first place.
The "young couple" who took out the liar loan with their eyes full of greed created the crap, and after that point it was just a question of who would end up holding the bag with the crap in it.
There's enough blame to go around but the victims here are the rest of us who aren't easily swayed by slimy used car salesmen, Hussein, and lying mortgage brokers. If the home owners were old enough to sign the papers, they're old enough to know to read the thing before they sign and old enough to take responsibility for their stupidity. Sorry, no sympathy for them. Plenty of sympathy for the rest of us who are having to take food out of our children's mouths to pay for everyone else's mistakes.