The Ultimate Wall Street Nightmare

[U376977]

Originally Posted by Pressing-On

I have a sister, in Colorado, that works in the mortgage industry. She said she is furious that these loans were given to people who could not pay! Out of the horse's mouth.

Hey, there are alot of us in the mortgage industry. Ok. There were some ............ products that were not designed for every borrower and some loan officers put people into products they could not afford. That is undeniable. And I am not arguing against that point. I just don't like these "news" stories and "blogs" that blame it all on a "greedy" CEO banker. It is just not true.
I did not want to get to technical...but....
For example, the Option Arm mortgage. It was a great product for a small number of borrowers---Investors who did not intend to hold the property for a long time and where HPA was rapidly increasing. Perfect example, an investor buying a condo at the beach--condo prices were increasing and maybe they are only going to hold the property a couple of years and rent it out during two or three summers. The Option Arm was a perfect product. IF they sold the property or refi before adjustment. The problem was that it was marketed to, for example, some guy in KY who wanted to buy a single family home that he wants to live in the rest of his life...That is a dumb product for him. BUT, for the most part, these loans were still performing until the real estate bubble burst. Countrywide was the largest seller of this product. Some banks NEVER put the product in their portfolio. What is scary about this is that most of CW option arms do not adjust until 2011, and it is an industry stat that 35% of all borrowers DO NOT know what type of mortgage they have.

[Pressing-On]

Originally Posted by U376977

Hey, there are alot of us in the mortgage industry. Ok. There were some ............ products that were not designed for every borrower and some loan officers put people into products they could not afford. That is undeniable. And I am not arguing against that point. I just don't like these "news" stories and "blogs" that blame it all on a "greedy" CEO banker. It is just not true.
I did not want to get to technical...but....
For example, the Option Arm mortgage. It was a great product for a small number of borrowers---Investors who did not intend to hold the property for a long time and where HPA was rapidly increasing. Perfect example, an investor buying a condo at the beach--condo prices were increasing and maybe they are only going to hold the property a couple of years and rent it out during two or three summers. The Option Arm was a perfect product. IF they sold the property or refi before adjustment. The problem was that it was marketed to, for example, some guy in KY who wanted to buy a single family home that he wants to live in the rest of his life...That is a dumb product for him. BUT, for the most part, these loans were still performing until the real estate bubble burst. Countrywide was the largest seller of this product. Some banks NEVER put the product in their portfolio. What is scary about this is that most of CW option arms do not adjust until 2011, and it is an industry stat that 35% of all borrowers DO NOT know what type of mortgage they have.

My sister worked with Countrywide. I understand what you are saying. There are other causes as well, we all know that. I'm putting out the information that disgusts me the most.

[Pressing-On]

Any comments on this?

"McCain offered a six- point plan for reforming Wall Street -- including consolidating the alphabet soup of regulatory agencies, promoting greater transparency, and creating a new oversight body called the Mortgage and Financial Institutions Trust or MFI. "This trust will work with the private sector and regulators to identify institutions that are weak and fix them before they become insolvent," McCain said."
http://abcnews.go.com/Politics/Vote2...5839771&page=1

[OP_Carl]

Originally Posted by Pressing-On

Any comments on this?

"McCain offered a six- point plan for reforming Wall Street -- including consolidating the alphabet soup of regulatory agencies, promoting greater transparency, and creating a new oversight body called the Mortgage and Financial Institutions Trust or MFI. "This trust will work with the private sector and regulators to identify institutions that are weak and fix them before they become insolvent," McCain said."
http://abcnews.go.com/Politics/Vote2...5839771&page=1

It's sad and ironic and I don't know what else that this nationalization of financial institutions is coming from the party of Goldwater and Reagan. It is starting to really look like the limited government movement is dead. The concept of property rights will come under assault next.

This is what happens when a nation loses its moral compass, when an entire nation is incessantly preoccupied with sticking the bill to the other guy.

Now that the U.S. government is the underwriter for 50% of the mortgages in this country, the other half is going to clamour in jealousy until the government is the underwriter for all of them. Otherwise, it's justnotfair!

It also remains to be seen how the government handles its newly acquired corner of the insurance business.

Let's see, the government monitors banking transactions in excess of $5000, income of various descriptions via a byzantine tax code, professional licensure, and now mortgage loans and insurance. Paychecks and corporate dividends are all garnished immediately upon issue. What do all of these have in common? They are things that are foreign to the poor and insignificant to the rich.

That's right, the government is quite enviably positioned to put the screws to the meat-and-potatoes middle class like it's never been done before.

And I don't like it one bit.

The good news is, as with most things, the government has no idea what it is doing. Their plans will backfire on them, but will bring explosive (endtime?) revival

[Pressing-On]

Originally Posted by OP_Carl

It's sad and ironic and I don't know what else that this nationalization of financial institutions is coming from the party of Goldwater and Reagan. It is starting to really look like the limited government movement is dead. The concept of property rights will come under assault next.

This is what happens when a nation loses its moral compass, when an entire nation is incessantly preoccupied with sticking the bill to the other guy.

Now that the U.S. government is the underwriter for 50% of the mortgages in this country, the other half is going to clamour in jealousy until the government is the underwriter for all of them. Otherwise, it's justnotfair!

It also remains to be seen how the government handles its newly acquired corner of the insurance business.

Let's see, the government monitors banking transactions in excess of $5000, income of various descriptions via a byzantine tax code, professional licensure, and now mortgage loans and insurance. Paychecks and corporate dividends are all garnished immediately upon issue. What do all of these have in common? They are things that are foreign to the poor and insignificant to the rich.

That's right, the government is quite enviably positioned to put the screws to the meat-and-potatoes middle class like it's never been done before.

And I don't like it one bit.

The good news is, as with most things, the government has no idea what it is doing. Their plans will backfire on them, but will bring explosive (endtime?) revival

I just received this e-mail from one of my sisters who is in the mortgage industry.

Oh yes, it infuriates me, one step closer to socialism. It's crazy now that 70% or more of the loans I process are government loans. It really ticks me off. It is right in my face everyday. And if Osama Obama gets voted in - we are done for sure.

[Pressing-On]

Interesting!

McCain's specific comments, on May 25, 2006:

Mr. President, this week Fannie Mae's regulator reported that the company's quarterly reports of profit growth over the past few years were "illusions deliberately and systematically created" by the company's senior management, which resulted in a $10.6 billion accounting scandal.

The Office of Federal Housing Enterprise Oversight's report goes on to say that Fannie Mae employees deliberately and intentionally manipulated financial reports to hit earnings targets in order to trigger bonuses for senior executives. In the case of Franklin Raines, Fannie Mae's former chief executive officer, OFHEO's report shows that over half of Mr. Raines' compensation for the 6 years through 2003 was directly tied to meeting earnings targets. The report of financial misconduct at Fannie Mae echoes the deeply troubling $5 billion profit restatement at Freddie Mac.

The OFHEO report also states that Fannie Mae used its political power to lobby Congress in an effort to interfere with the regulator's examination of the company's accounting problems. This report comes some weeks after Freddie Mac paid a record $3.8 million fine in a settlement with the Federal Election Commission and restated lobbying disclosure reports from 2004 to 2005. These are entities that have demonstrated over and over again that they are deeply in need of reform.

For years I have been concerned about the regulatory structure that governs Fannie Mae and Freddie Mac--known as Government-sponsored entities or GSEs--and the sheer magnitude of these companies and the role they play in the housing market. OFHEO's report this week does nothing to ease these concerns. In fact, the report does quite the contrary. OFHEO's report solidifies my view that the GSEs need to be reformed without delay.

I join as a cosponsor of the Federal Housing Enterprise Regulatory Reform Act of 2005, S. 190, to underscore my support for quick passage of GSE regulatory reform legislation. If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system, and the economy as a whole.

I urge my colleagues to support swift action on this GSE reform legislation.

GovTrack: Senate Record: FEDERAL HOUSING ENTERPRISE REGULATORY REFORM... (109-s20060525-16)

If this bail-out is a must, I'd like to see it limited to the troubled loans of ONLY owner occupied homes. By that I mean that I can't see buying the bad paperwork on homes purchased by speculators/investors.

[Pressing-On]

Interesting! Obama is complaining that McCain stole his idea on the Golden Parachutes - looks like it was McCain's idea.

Text of S. 190 [109th]: Federal Housing Enterprise Regulatory Reform Act of 2005

Section 11 Limit on Golden Parachutes

http://www.govtrack.us/congress/bill...?bill=s109-190

[DividedThigh]

understandable that he would have had grave concerns being that fanie and freddie were protected by sens and congs that were on the take politically, mostly dems, unreal, dt

[Pressing-On]

I was looking for something along these lines. Hoping to see it. I heard that Mitt Romney is working with McCain on the bailout.

I don't know why the fourth sentence dropped off. lol

Dodd spoke as Paulson, Bernanke and other top officials listened from a few feet away, ready to publicly plead for swift action.

Meanwhile, the Republican Study Committee has crafted some possible "fixes" to the plan drawn up over the weekend by Paulson.

Among them are a "pay-to-play fee" for institutions involved in the bailout; an on-budget item in annual appropriations bills and an exit strategy so companies won't pin their losses on the Treasury.

The RSC issued a top 10 list late Monday of problems they see with the $700 billion plan aimed to add liquidity to the market so that investment firms don't

Among the problems cited were the additional burden on the national debt, the failure to penalize shareholders and debt holders who "should bear the risk of loss" and the socialization of the formerly free-market system.

"In my judgment, it would be foolish to waste massive sums of taxpayer funds testing an idea that has been hastily crafted and may actually cause the government to revert to an inadequate strategy of ad hoc bailouts," said Sen. Richard Shelby of Alabama, the top Republican on the Senate Banking Committee. Shelby called the emerging plan "neither workable nor comprehensive."

http://www.foxnews.com/story/0,2933,426232,00.html

[U376977]

Govt bailout of banks:

Will 700 B be enough?

2008-09-23 — ml-implode.com


"If defaults remain at roughly $20bb per month in CA and $50bb nationally and this new $700bb bailout is suppose to clean up banks past troubles, what is left for the potential $1tt in current defaults coming over the next two years? This plan is being debated today in Washington as if mortgage and housing crisis was over and they are trying to clean up the aftermath. I am sure many there really think this is about the real estate market."