rip fannie and freddie

Originally Posted by dalakhani

I hear you Phil. But letting Wall St. take their lumps will only further exasperate an already skittish market. Lack of available lending products and higher rates are now the leading detriments to housing recovery. Ratios of price/income and mortgage payment/rent have come back to sane ,sustainable levels.

So say you let the GSE's fail which appeared fait accompli. What would that do? It would cause the housing market to completey tank as the ONLY source of money would be FHA (which will see huge troubles ahead...another subject) or private banks (which are charging crazy rates for non agency paper).

If the government was going to inject the massive amounts of capital necessary to prop up the GSE's, doesnt it only make sense that they can truly run and regulate them? And for the record, the government is going to make a nice profit when this all shakes out.

lastly, the bolded part needs a little clarification. Do you really think the banks and brokers that originated the loans even CARED about whether the homes would appreciate? Do you think the investment banks did? Or do you think that they thought they could continue to pass the paper off to some other poor sucker?

I will interject.
I can't help it.

imo they(Mortage companies) were pulling people off the street and giving them mortages that looked very attractive to 2ndary and on investors who did not do their homework (the majority of the people would not be able to pay these rising rate pile o crap loans). Basically a pyramid scheme destined to fail. And now we see who ends up holding the cleaning products that wont sell. Stupidity and greed are fantastic partners for the get rich quick.

[philcski]

Originally Posted by pgardn

I will interject.
I can't help it.

imo they(Mortage companies) were pulling people off the street and giving them mortages that looked very attractive to 2ndary and on investors who did not do their homework (the majority of the people would not be able to pay these rising rate pile o crap loans). Basically a pyramid scheme destined to fail. And now we see who ends up holding the cleaning products that wont sell. Stupidity and greed are fantastic partners for the get rich quick.

A little simpler than I would have written, but pretty much correct.

[dalakhani]

Originally Posted by pgardn

I will interject.
I can't help it.

imo they(Mortage companies) were pulling people off the street and giving them mortages that looked very attractive to 2ndary and on investors who did not do their homework (the majority of the people would not be able to pay these rising rate pile o crap loans). Basically a pyramid scheme destined to fail. And now we see who ends up holding the cleaning products that wont sell. Stupidity and greed are fantastic partners for the get rich quick.

Yes, fraud was ramapant. But you have to understand the climate of the industry during that period of time 2003-2007. Investment banks were creating products that all but screamed "we dont care if its fraud or not". Are you telling me its the mortgage broker's fault for originating a loan that required no income, no assets and no JOB with an LTV of 100%? These were wall st creations and their appetite was INSATIABLE. And why? Because they knew they could package it up in a CDO and have a ratings company slap triple A on it.

I think the notion that loan officers and consumers can get away with that level of fraud without Wall St. being compliant is totally naive. It was Indeed systemic.

Originally Posted by dalakhani

Yes, fraud was ramapant. But you have to understand the climate of the industry during that period of time 2003-2007. Investment banks were creating products that all but screamed "we dont care if its fraud or not". Are you telling me its the mortgage broker's fault for originating a loan that required no income, no assets and no JOB with an LTV of 100%? These were wall st creations and their appetite was INSATIABLE. And why? Because they knew they could package it up in a CDO and have a ratings company slap triple A on it.

I think the notion that loan officers and consumers can get away with that level of fraud without Wall St. being compliant is totally naive. It was Indeed systemic.

Sorry its passing it down. The loan officers that had been in the game a long time KNEW it was wrong. They questioned the outrageous loans and some got stiffed and fired by their employers, the Mortage companies. It was happening all over the country. So hell yes the people at the top(primary lenders) of the scheme knew it was wrong... imo. Now this might have been made easy by other entities but with loan officers smelling fish early on... the dadgumb loan officers with experience knew. Thats bad.

[skippy3481]

Very interesting thread