Friday, September 26, 2008
The Liar's Loan
http://www.slate.com/id/2189576
Tracy gave me the above link - it's the loan I couldn't think of the name for. The nickname of Liar's Loan fits it well enough that the real name doesn't matter. More than 60% of these people overstated their income by MORE than 50%. The borrower knew about the lie. The real estate agent knew. The loan underwriter knew. Yet everyone turned a blind eye for years to land our economy in the mess it is in today. Today WAMU (Washington Mutual) a bank that has been around since 1889 went belly up - over 300 billion dollars in assets is by far the largest ever to go under. How did a financial institution of this size with 120 years of experience under the belt allow itself to get so deep into this mess it collapsed? If a bank of this size (well, it was a savings and loan actually, the largest one) has failed what others are on the horizon?
Tracy gave me the above link - it's the loan I couldn't think of the name for. The nickname of Liar's Loan fits it well enough that the real name doesn't matter. More than 60% of these people overstated their income by MORE than 50%. The borrower knew about the lie. The real estate agent knew. The loan underwriter knew. Yet everyone turned a blind eye for years to land our economy in the mess it is in today. Today WAMU (Washington Mutual) a bank that has been around since 1889 went belly up - over 300 billion dollars in assets is by far the largest ever to go under. How did a financial institution of this size with 120 years of experience under the belt allow itself to get so deep into this mess it collapsed? If a bank of this size (well, it was a savings and loan actually, the largest one) has failed what others are on the horizon?
Monday, September 15, 2008
Thanks for the housing mess
Some of my posts the one or two people that read these might wonder if I'm serious - let me say up front I'm serious in this post. The whole housing mess and the collapse of financial institutions, our economy, and the huge waste of my tax dollars to pay for bailouts is manure. Nothing is really being done that should be done to the people that caused this.
The purchase of a home is by far the largest purchase most people will ever make. If you make this purchase without doing some research then you're an idiot. Ignorance of the law is no defense nor as far as I'm concerned a defense for this either. If you're now homeless (or lost your house in which case you should be homeless for at least ten years and not allowed any rental or purchase of a dwelling - and probably pay a 50% tax rate) then you deserve to be. Just because you're an idiot my tax dollars shouldn't be used to pay your mortage because you were too stupid to learn what an ARM could mean in a few years when you bought a house you obviously couldn't afford.
The real people who need to pay are the people who made all the money in the past years from this fiasco. Like home builders and real estate agents. ANYONE invovled in abusing the Title ? Loan things (where you don't have to prove your income but pay a little higher interest rate) it should be considered fraud and you be financially wiped out - everything - left homeless, carless, furnitureless, I don't really care. I'd go for corporal punishment too if we could bring back the whip. You sold these loans to people saying the house would go up so much in value that in a few years you would be able to take that profit and use it as a down payment for a new fixed rate loan, just sign here for that ARM. Everyone knew bubbles all burst, but no one cared because they were making money hand over fist.
Well, the bubble burst and the country is left in a financial mess. The people who did this and profited still have their money. Well, there were some like that Las Vegas couple who couldn't afford to pay for their highly depreciated house who had made millions in the real estate sales but spent it as fast as they made it so were now broke. The people who bought houses that were late getting in now can't afford the ARM or are upside down in their loan. The financial institutions that knew what would eventually happen are now filing bankruptcy. Who's left to pay for this mess?
People like me. I didn't get one of those loans and have an ARM hit me, I rent an apartment and saw my rent skyrocket 50% in 13 months. Why? Because thousands of local rental units were converted to condos because of this housing bubble - and supply went down and demand didn't change so my rent went up. Even now with all the people bailing out of their houses they now are in the rental market, or even people that don't want to buy right now because they want to see how far prices will drop, are in the rental market - so my rent is still going up. So my tax dollars are being used to keep people in a house they couldn't afford, throw money at financial institutions that shouldn't have made (or bought these packaged loans) in the first place - and yet I only get hit with higher and higher costs every day because of this.
The impact from this is far far greater than Enron or MCI and yet not even one person of the people who were responsible (and profited) for letting this happen will ever have anything done to them. I have only seen a couple of articles about possibly pursuing for fraud for knowingly using the Title ? (9? 8? whatever they are) loans but they are afraid too because it would be like going after a victim (that person who lost their house).
It's not over yet. What most people don't realize (because it's never talked about) our trade deficit for all these decades means the same as the trillions of dollars our government owes now - the world holds our dollar. The same as what will happen to a bank on a bank run can happen to the good old USA if the world makes a run on us to turn in our dollar. We can't cover it. It will be devistating to our economy. If for nothing else we import but oil that alone will make our oil and gas prices go up to unimaginable levels. We really don't know how bad this will get and I don't suppose people realized how bad it was going to get in 1927.
The purchase of a home is by far the largest purchase most people will ever make. If you make this purchase without doing some research then you're an idiot. Ignorance of the law is no defense nor as far as I'm concerned a defense for this either. If you're now homeless (or lost your house in which case you should be homeless for at least ten years and not allowed any rental or purchase of a dwelling - and probably pay a 50% tax rate) then you deserve to be. Just because you're an idiot my tax dollars shouldn't be used to pay your mortage because you were too stupid to learn what an ARM could mean in a few years when you bought a house you obviously couldn't afford.
The real people who need to pay are the people who made all the money in the past years from this fiasco. Like home builders and real estate agents. ANYONE invovled in abusing the Title ? Loan things (where you don't have to prove your income but pay a little higher interest rate) it should be considered fraud and you be financially wiped out - everything - left homeless, carless, furnitureless, I don't really care. I'd go for corporal punishment too if we could bring back the whip. You sold these loans to people saying the house would go up so much in value that in a few years you would be able to take that profit and use it as a down payment for a new fixed rate loan, just sign here for that ARM. Everyone knew bubbles all burst, but no one cared because they were making money hand over fist.
Well, the bubble burst and the country is left in a financial mess. The people who did this and profited still have their money. Well, there were some like that Las Vegas couple who couldn't afford to pay for their highly depreciated house who had made millions in the real estate sales but spent it as fast as they made it so were now broke. The people who bought houses that were late getting in now can't afford the ARM or are upside down in their loan. The financial institutions that knew what would eventually happen are now filing bankruptcy. Who's left to pay for this mess?
People like me. I didn't get one of those loans and have an ARM hit me, I rent an apartment and saw my rent skyrocket 50% in 13 months. Why? Because thousands of local rental units were converted to condos because of this housing bubble - and supply went down and demand didn't change so my rent went up. Even now with all the people bailing out of their houses they now are in the rental market, or even people that don't want to buy right now because they want to see how far prices will drop, are in the rental market - so my rent is still going up. So my tax dollars are being used to keep people in a house they couldn't afford, throw money at financial institutions that shouldn't have made (or bought these packaged loans) in the first place - and yet I only get hit with higher and higher costs every day because of this.
The impact from this is far far greater than Enron or MCI and yet not even one person of the people who were responsible (and profited) for letting this happen will ever have anything done to them. I have only seen a couple of articles about possibly pursuing for fraud for knowingly using the Title ? (9? 8? whatever they are) loans but they are afraid too because it would be like going after a victim (that person who lost their house).
It's not over yet. What most people don't realize (because it's never talked about) our trade deficit for all these decades means the same as the trillions of dollars our government owes now - the world holds our dollar. The same as what will happen to a bank on a bank run can happen to the good old USA if the world makes a run on us to turn in our dollar. We can't cover it. It will be devistating to our economy. If for nothing else we import but oil that alone will make our oil and gas prices go up to unimaginable levels. We really don't know how bad this will get and I don't suppose people realized how bad it was going to get in 1927.
