Quote:
Originally Posted by goof2
The main contributing forces behind the housing foreclosure issue are stupid people borrowing and stupid bankers lending way more money than the borrowers could hope to afford to pay back.
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Greed all around
Lenders, trying to make a few extra $$$ start offering non traditional loans to regular folk offsetting the risk by increased rate.
Folks - we shall call them by the common name "idiots" jump on the bandwagon and start chasing homes they normally could not afford.
The next group of folks -also known as"asshats" - start taking out jack ass loans like ARMs, interest only and whatever fuckall "should only be for wealthy people" loans because:
- Their friends told them about all the money that can be made from flipping houses and they no a "friend" who does it.
- They read this great book about how to make money in real estate
- They'll just sell it before the mortgage resets and then they'll make a killing because "you can't go wrong " in real estate
Finally you have "the jackasses" all the folks who were the core demographic for sub prime loans.
Lenders stop taking ownership of loans by selling them off as soon as soon as the borrower signs the paper work. So the guy working the mortgage doesn't give a shit about the quality of the application or loan because they are just going to sell it off to Ginnie Mae or some other institution so that the loan could be bundled up with a bunch of other loans in a mortgage backed security. Hell, maybe that MBS wilol get bundled up in a collateral debt obligation and then they can take out a credit default swap on it and make a fucking killing on the market.
And guess what? It doesn;t matter if half your mortgages were made to unemployed convicts and homeless people...the ratings agencies will still slap a triple A rating on the security those mortgages are bundled into!!
Since there is such a nice revenue stream from selling off these mortgages lets generate as many loans as possible to whatever demographic we can find that can sign their name. Hell, the government is always pushing to up homeownership and all those stupid reports we have to submit to the gov have to breakdown the portfolio to make sure we are abiding by all the regulations so lets mipress em by listing a bunch of mortgages to poor people!! Who the fuck cares if they probably will defualt on the mortgage 2 years from now...by the time we won't even own the mortgage (or the risk that goes along with it) anymore.
Lets just sell sell sell. Maybe even hire some PR firms to spread the word to the public that all these kooky mortgages are a sure thing and that everyone should by a home. Who cares if these people don't know what they are getting into.
Don't get me started on the people that took out all these fruity mortgages to buy houses.
who that was a fucking tangent...
Anyway...now it looks like most of the foreclosures are being generated by people who took out regular mortgages and were prime. So now the foreclosure rate is being pumped up from poor economic conditions. Lets not forget that a lot are health related as is the case with the people in the story.
must stop typing.
now I'm rambling