Mortgage blog

Concerning the current financial crisis, there is so much mis information out there ,such as posting blame on low income homeowners, community organizations and such, don't believe the HYPE!

Wall street did this, for example they securitized investment
instruments with 30 to 1 ratios, let me make it even clearer for those
who don't understand, they leveraged 30 million dollars for every
1 million dollars of mortgaged backed securities, imagine if YOU could
borrow 30 time your homes value? Bad idea? you bet. Unregulated hedge
funds traded & sold these worthless investments to you & everyone
else, here is blip from MY daily hedge report that by the way is from
one of the most conservative bond trading experts in the industry:

“ The public has good reason to be angry; no one is as angry and
frustrated than I am. Wall Street and greedy investors caused this,
aided in no small part by the rating agencies (S&P, Moody's, Fitch).
We saw the train roaring down the tracks three years ago as mortgage
loans were made to millions that should not have been done. Wall
Street asked for the junk and they got it, deals with mortgage lenders
to increase the volume of sub prime loans were common; and contrary to
what some believe most of the paper was securitized by The Street and
not by Fannie and Freddie. The rating agencies stepped up to do their
part by issuing AAA ratings on those securities; banks and other
investors didn't hesitate to look any farther than AAA ratings
although the rates of return were so much higher compared to "normal"
investments with the same ratings---a red flag ignored. The
overwhelming desire to make bigger profits supplanted logic."


So once again, the great spin machine gets to blame the BAD PUBLIC for
borrowing more than they should when the actual reality is that WALL
STREET sets the underwriting standards. Mortgage companies & banks are
OBLIGATED under federal law to lend the money if the borrower
qualifies & is not committing fraud.

Another fact; less than 20 %(19%) of foreclosures are of what is
called SUBPRIME mortgages, the other 80% are good loans made to
conforming credit borrowers. No so called dirtbags here. Just fellow citizens
who lost there jobs, or other financial pressures. Most could have
been saved, but with falling real estate values now nationwide coupled
with the resultant capitol shortage, it is impossible for them to
refinance out of their current predicament.

Contrary to what you think is true, housing initiatives proposed prior
to 9/11 have absolutely nothing to do with the current crisis. In fact
I find it interesting that not ONE pundit or so called expert talking head has even mentioned the biggest single event that has shaped the
last 8 years financially, 9/11.

Low interest rates spurred the housing market & auto industries that
saved us from the inevitable depression that should have been caused
by the events that day. We literally spent our way out of it. Mortgage volume increased tremendously over those 3 years. When rates creeped up,
mortgage volume returned to pre 9/11 levels. But wallstreet was greedy
for the volume it had in the boom times, & lowered standards to get
it. The rest is history. When you leave unregulated entities to play with
other people’s money all by themselves with no supervision, this is
what you get.
BTW I have been lending money for over 27 years, and in no time in
those years was it mandatory to put 20% down to get a mortgage, even
during the carter admin we were making non VA loans with 5% down.
Another fallacy that I have read lately.

Stay tuned more to come……………