In every mortgage conduit around the nation, for example Countrywide, Indymac, etc.), there lies a department full of young aggressive relationship managers/account executives who push loans through a pipeline. Each day they print out their pipelines which can sometimes be hundreds or thousands long. From each loan that is funded, they are given a percentage (commission). For subprime loans, usually the commission was much greater. Now, picture this... An army of relationship managers pushing through loans at any cost. Documents being forged, manipulated and underwriters placed under pressure or even bribed. Guidelines thrown out the window and an environment where just about anyone who can sign their name gets a loan. Then imagine these loans being packaged up and sold off to some unknowing third party. The third party might be a hedge fund or even a pension fund. In fact, the third parties might even know they are buying ticking time bombs, but dont care. They might be just traders or managers at the fund who might want to make money for the moment and not worry about the coming explosion. Hey, why not, afterall, its not their money. Its some guy's pension and not their own. These loans are ticking time bombs that will explode in time. The picture is actually a lot worse then I have painted. I believe in time more problems will emerge especially as the economy becomes worse in the next 12 months.
I dont believe they are the real problem more a symtom of the real danger I see in the near future and the is the eventual realingment of world exchange rates
They had a credit bubble in the 1920's, too. Nobody thought that housing prices would crash, and nobody thought the stock market would crash. Nobody thought the dollar would get devalued by 69%, either, but that was the result n 1934.
if only they were aggressive...we might not be in this situation....so much money was being tossed at them greed took over....and then we find ourselves today in the situation were are at...but hey you cant blame the players you can only blame the game....peace
A lot of documents were not forged. What was done however is omitting certain questions. Such an important question as household income was left blank. Imagine 20 years ago going to a bank for a home loan, and saying by the way I do not want to state my income. By omitting an income a buyer is of course stuck with a higher rate. But the higher the rate the better it is for mortgage broker since it brings higher commissions. And the other 2 best features of these loans is a teaser rate where buyer practically pays nothing at the beginning and the ability to borrow even more $ than the price of the house to be able to afford even the teaser rate payments. Very interesting how this will play out. The most import thing however is to be able to position ourselves to be able to profit from all of this.
the same shit....faking, forging , exempting...all falls down to pretty much fraudulant activity....which was pretty much running rampant in this industry...
Of course we can blame the players. Nobody has a gun to their head when they're being reckless and greedy. We can also blame regulators. They should never have allowed this. (BTW, just what DOES Gummint do for us except spend our money and confiscate liberties?)
tossing free money at them is equivalent to holding a gun to their heads.... if there is a game for the rapin there will always be players.....now dont forget that there are more players involved not just the pushers... you have the bag holders who obviously bit off more than they can chew...they should carry most of the blame...peace
Maybe its unfair to say things like documents were forged or other such fraud was committed when I actually do not know and was not there. However, I know that a bunch of hot blooded young account executives on commission will not be saints. You know they will do whatever they can to push a loan through even if it means doing something dishonest. The problem, though, will not go away. All of it is still there and packaged up into loans floating in our hedge funds, our pension funds and wherever else silently waiting to go off like a time bomb. Whatever those young guys did to get the comish, you can bet that not all of the procedures were filed and dishonest methods were probably used.