The Mortgage Crisis: Risky Loans Still Legal?

[Edible Napalm]

http://www.youtube.com/watch?v=4w-_lxVs4sM&feature=user
In the wake of the government take over of mortgage giants Fannie Mae and Freddie Mac, John Taylor of the National Community Reinvestment Coalition says the types of sub-prime loans that led to the mortgage crisis are still legal.

[Edible Napalm]

http://www.youtube.com/watch?v=Pit0oURs2gY
In the wake of the government take over of mortgage giants Fannie Mae and Freddie Mac, John Taylor, President/CEO of the National Community Reinvestment Coalition talks about the record number of home foreclosures in the U.S.

[Edible Napalm]

http://www.youtube.com/watch?v=_DKmKTXgRSg
In the wake of the government take over of mortgage giants Fannie Mae and Freddie Mac, John Taylor, President/CEO of the National Community Reinvestment Coalition talks about how lower lending standards fueled the mortgage crisis.

[Edible Napalm]

http://www.youtube.com/watch?v=_r41Yufz4S0
In the wake of the government take over of mortgage giants Fannie Mae and Freddie Mac, John Taylor, President/CEO of the National Community Reinvestment Coalition says people who own stock in either institution should hold on to it.

[Digital_Trauma]

you should just make one thread and place all your dozens of daily current event / drudge report links in it. You could label it, "Edible Napalm's Leftist Leanings."

[Jolie]

The bigger question isnt why are lenders giving loans to people who can't afford them, its why are freddie and fannie securing loans that the borrower cant afford?

If Joe Lender wants to give someone a loan they cant afford, thats all well and good - but Freddie and Fannie should have controls in place that prevent them from securing these loans in the first place. Its why they don't secure Jumbo loans, its why the federal govt (Ginnie) doesn't secure loans above certain thresholds - they are supposed to have rules in place.

the point of Freddie, Fannie and Ginnie is to give lenders recourse so that if a borrower DOES default, Joe Lender isn't necessarily out of business because of it...

Borrower A takes out a loan with Joe Lender... Joe Lender needs the cash to pay for this loan so he sells the loan to Freddie / Fannie / Ginnie. They get the money by selling the securities through the market. Then when Borrower A makes a payment, that payment gets passed through to the shareholder. If Borrower A can't make a payment, Freddie / Fannie still guarantee that the investor will get their money. So the way to stop this problem from continuing is for Fannie / Freddie to stop buying sub-prime loans and securing them.

[BCH]

The biggest question in my mind is why doesn't Borrower A have a better concept of his own finances? If you know you're taking home $4,000 a month and you're taking out a mortgage which will cost $2800 then you're an idiot. You don't get a mortgage just because someone will write it for you. You get one because you're sure you're ready to own a home and you've run the numbers and figured out that you can indeed afford it.

I'd have an easy time financing that Porsche SUV thing for $90,000 right now based on my credit / income but that doesn't mean I could afford it. When I default on the loan it's the Bank's fault?

[Jolie]

The biggest question in my mind is why doesn't Borrower A have a better concept of his own finances? If you know you're taking home $4,000 a month and you're taking out a mortgage which will cost $2800 then you're an idiot. You don't get a mortgage just because someone will write it for you. You get one because you're sure you're ready to own a home and you've run the numbers and figured out that you can indeed afford it.

I'd have an easy time financing that Porsche SUV thing for $90,000 right now based on my credit / income but that doesn't mean I could afford it. When I default on the loan it's the Bank's fault?

No, its your fault. But the reason you could get the loan at a cheap rate in the first place is because those loans will ultimately get pooled with other similar loans and sold to investors who get a guarantee that the money will come back to them at some point.

The people who decided to buy loans they couldn't afford were stupid. But in this case, Fannie and Freddie were just as stupid for pooling those loans into securities and taking on the guarantee to investors that they would get their money if they bought the security. They shouldn't be buying loans that are that risky.

[Voss's Tumor]

This story's retarded.

Yes, they're still legal, but no, the banks are no longer underwriting them, so none are being done.

Not everyone who got a sub-prime underwritten loan went in to default. In fact, the vast majority didn't.

[patbattlefield]

I am a Notary Signing Agent for various mortgage companies and I have seen the loans some of these idiots have taken. Interest only. ARM Loans. I have been in $250,000 - $500,000 homes with no furniture because the dopes could barely afford the mortgage and they are resigning with an adjustable rate that will go up in 2-3 years. That's the kind of shit that was going on. Its a wonder we still have a mortgage market. There is no way in hell some of those people should have been approved for loans. Now my job is in the shitter because of the fallout. Asshats.

[Edible Napalm]

http://www.youtube.com/watch?v=pfeZXJ_N-gs&feature=user
In the wake of the government take over of mortgage giants Fannie Mae and Freddie Mac, John Taylor, President/CEO of the National Community Reinvestment Coalition talks about how responsible borrowers are being hurt by the mortgage crisis.

[Three Hole Puncher]

I have been in $250,000 - $500,000 homes with no furniture because the dopes could barely afford the mortgage and they are resigning with an adjustable rate that will go up in 2-3 years. In my neighborhood back in NY we had one of these. It was a family of knitters(the only in the entire neighborhood). As I was running my miles at night I used to look in through their window and see their little niglet riding his big wheel around their empty living room. You could see him because they couldn't even afford curtains for the windows. Here's the kicker... this was a 4000 sq. ft. house with a market value, at the time, of aound $800,000. The house was foreclosed on(of course) after they had lived there for less than a year. I remember when they moved, all of their furniture and shit fit in one U-Haul box truck. A four thousand square foot house, and all of their possessions fit in a 24 foot U-Haul truck.