CNN Money - Foreclosures up 75% in 2007

brewer12345 said:
We may well see some jail terms handed out. But there are some significant differences this time around:

- The vast majority of these bad loans were not govt paper, they were private market stuff. So you can try for civil suits, but probably not criminal.
- Many of these loan programs were some flavor of low doc/no doc/stated income. While borrowers were not supposed to falsify their data, if nobody actually checked then it is going to be hard to prove that things were fraudulently filled out.
Click to expand...

Actually they did break a federal law if they signed that they were making more money than what they really made... I know of a former lawyer who was in the Fed pen for a year doing just that... this even though he paid the loan off long before they charged him with a crime...
 
To me, the homeowner that fails to keep up his/her end of the bargain is as guilty as the folks who used questionable lending practices to give someone a home they should not have gotten..........
Click to expand...
Both are guilty.
 
IMHO, the entire mess if a result of greed or ignorance. Everyone involved to some degree is responsible. Is it a crime, fraud or minor offense is debatable. Is it a violation of a moral or social standard is also questionable. In short, I dunno.
 
FinanceDude said:
Crimes is a strong word. Let me understand this, in your view ANYONE with sub-prime credit that got a home they couldn't afford is a "victim", basically someone took advantage of them?

I don't know about you, but folks try to take advantage of me every day, spammers, solicitors, etc. Funny I don't fall for it. Is it because I'm so smart? No, it's because when I apply COMMON SENSE, it works........;)

On the one hand, you have people that quite honestly were not good credit risks getting homes for two reasons:

1)Soaring values of homes with "no end in sight", and

2)Creative lenders that used ambiguous lending tactics to get folks into the homes.

A recipe for disaster? Turns out yes........

So, let me make sure I get this correctly. You are saying that ALL the parties in this mess need to PAY for their crimes, right? And, the "homeowner" was coerced and/or made to sign a document that was fake?

You have a bigger imagination than me. Sounds like the one of the two biggest human emotions, in this case GREED, came to light for the BUYER of the home in the equation.

But, fear not, Mr.Government steps in and bails them out. Now someone with a FICO of 750+ who makes $175,000 a year (one of my clients) has trouble getting the bank to agree to a 100% finance, because of "tightened lending policies" when another guy with a FICO of 550 is sitting in a 125% LTV, got a check at closing to spend on goodies, and gets a free ride...........how nice is that??:rolleyes::rolleyes:
Click to expand...

New York prosecutors are now investigating "whether Wall Street banks witheld crucial information about the risks posed by investments linked to subprime loans." Reports that were order by the banks have raised concerns about "high risk loans known as exceptions." Exceptions failed to meet even the very lax standards of subprime mortgage companies and Wall Street firms. The problem is that the banks failed to disclose the details of these reports (that they themselves had ordered) to credit reporting agencies or investors.

New York attorney general, Andrew M. Cuomo, is focusing on how banks bundled billions of dollars of these "exception loans" with other subprime debt into complex mortgage instruments.

The attorney general's office in Connecticut is conducting a similar survey.

In a nutshell, these inquiries are investigating the role Wall Street played in, "igniting the mortgage boom that has imploded with a burst of defaults and foreclosures."

Exception loans are no small piece of the estimated one trillion dollars in subprime loans. Some experts estimate these loan comprise up to five hundred billion dollars or more of the total subprime loans that were made.

In Connecticut, only civil charges can be brought, however, in New York the attorney general may file civil as well as criminal charges.

The Securities and Exchange Commission is currently investigating how Wall Street sold complex mortgage instruments. More than thirty investigations are currently being performed by the S.E.C., however, no conclusion has been reached on security law violations.

Subprime lenders relaxed their underwriting guidelines during the housing boom and began offering "no doc", that is, loans that do not verify income. They played a major role in helping to inflate the housing bubble.

http://www.nytimes.com/2008/01/12/b...rss&adxnnlx=1201669542-N0StTWJmHOoqDk0DnYN0xg
 
Wags said:
NBC News article Hidden victims of mortgage crisis: Pets

Hidden victims of mortgage crisis: Pets - Mortgage mess - MSNBC.com

This makes the current situation even sadder not only are families in trouble but so are their pets. Things are really bad when Kitty and Puppie are also victims.

GOD BLESS:angel:
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It's all about responsibility, and sadly, some people really do not take their responsibilities seriously.

This doesn't surprise me at all, because I think that most of those who would take on unrealistic and risky mortgage loans that they can't afford, are not shepherding their finances in a responsible manner.

The same people probably do not fully comprehend the responsibilities of pet ownership. It's really sad for their poor pets, who never asked for this kind of treatment and can't understand it.
 
Want2retire said:
It's all about responsibility, and sadly, some people really do not take their responsibilities seriously.

This doesn't surprise me at all, because I think that most of those who would take on unrealistic and risky mortgage loans that they can't afford, are not shepherding their finances in a responsible manner.

The same people probably do not fully comprehend the responsibilities of pet ownership. It's really sad for their poor pets, who never asked for this kind of treatment and can't understand it.
Click to expand...


You are so on point here.

I am so sick of hearing how the poor fool is going to lose his house because of a subprime loan. Bottom line everyone who signed the papers at closing saw what would happen IF rate went up, and they would and have. I know in my case I NEVER would have gotten into a situation where a 1000 payment could balloon to a 2500 paymen in 3 or even 6 years out. Nope.

Now the problem for everyone is when that neighbor of yours does foreclose and then anothe around the block then the one behind your house. It Efs up everything in the neighborhood. Not sure how to fix that mess, other than getting out and moving if you could sell your place.

No easy answers, but many who talk about how messed up things are are well right, It is messed up out here in the land of realestate.
 
It's all about responsibility and greed.

USA today - UBS adds $4B to subprime losses, bank deep in red
UBS adds $4B to subprime losses, bank deep in red - USATODAY.com

Excerpts from the article
The latest disclosure lifted the bank's total write-downs from the subprime debacle to $18.4 billion and will likely increase pressure on chairman Marcel Ospel, at the UBS helm during its push into risky U.S. investments, to resign.
UBS, world banking's leading wealth manager, posted an $11.45 billion loss for the last three months of 2007 and a full-year loss of 4.4 billion francs, a grim closure to its worst performance in history.

End of excerpts.

It appears that the subprime fisaco is getting worse and worse.

GOD BLESS:angel:
 
Retire Soon said:
New York prosecutors are now investigating "whether Wall Street banks witheld crucial information about the risks posed by investments linked to subprime loans." Reports that were order by the banks have raised concerns about "high risk loans known as exceptions." Exceptions failed to meet even the very lax standards of subprime mortgage companies and Wall Street firms. The problem is that the banks failed to disclose the details of these reports (that they themselves had ordered) to credit reporting agencies or investors.

New York attorney general, Andrew M. Cuomo, is focusing on how banks bundled billions of dollars of these "exception loans" with other subprime debt into complex mortgage instruments.

The attorney general's office in Connecticut is conducting a similar survey.

In a nutshell, these inquiries are investigating the role Wall Street played in, "igniting the mortgage boom that has imploded with a burst of defaults and foreclosures."

Exception loans are no small piece of the estimated one trillion dollars in subprime loans. Some experts estimate these loan comprise up to five hundred billion dollars or more of the total subprime loans that were made.

In Connecticut, only civil charges can be brought, however, in New York the attorney general may file civil as well as criminal charges.

The Securities and Exchange Commission is currently investigating how Wall Street sold complex mortgage instruments. More than thirty investigations are currently being performed by the S.E.C., however, no conclusion has been reached on security law violations.

Subprime lenders relaxed their underwriting guidelines during the housing boom and began offering "no doc", that is, loans that do not verify income. They played a major role in helping to inflate the housing bubble.

http://www.nytimes.com/2008/01/12/b...rss&adxnnlx=1201669542-N0StTWJmHOoqDk0DnYN0xg
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how much people were sent to jail after the 2000 bust and after we learned all the nonsense wall street said back then? Enron and Worldcom there were real crimes there.

in this case the ratings agencies have disclaimers that pretty much say this is a guideline and do your own research

what will probably happen is they will make a deal, pay off the AG's and admit no wrongdoing and start working to make money off the next bubble. wall street doesn't make money because they are smart, most people there are just average intelligence people. they make money off hype and the stupidity of others
 
FBI Opens Subprime Inquiry

brewer12345 said:
We may well see some jail terms handed out. But there are some significant differences this time around:

- The vast majority of these bad loans were not govt paper, they were private market stuff. So you can try for civil suits, but probably not criminal.
- Many of these loan programs were some flavor of low doc/no doc/stated income. While borrowers were not supposed to falsify their data, if nobody actually checked then it is going to be hard to prove that things were fraudulently filled out.
Click to expand...

Fourteen companies are currently being investigated for subprime-related fraud. Included in this investigations are violations of possible accounting fraud and insider trading. The New York Times reported today that these violations are connected to loans made to borrowers with weak or subprime credit.

The inquiry which began last Spring includes companies in the financial industry and is focusing on mortgage lenders, loan brokers and even Wall Street banks that packaged the securities that were then sold to unsuspecting banks around the world.

The FBI has been warning for years that mortgage fraud there "is a significant and growing problem. In 2006, there were 35,000 suspicious activity reports. This is a very sizable increase from 2005 when there were 22,000 reports and 7,000 in 2003.

Many of the cases are now focusing on local and regional mortgage fraud rings that involve speculators, loan officers and brokers.

I think we're only now seeing tip of the iceberg in the criminal fraud that permeated the home loan industry over the past few years, which helped to further inflate the housing bubble. Unfortunately, the global economy will now have to pay the piper.

http://www.nytimes.com/2008/01/30/business/30fbi.html?_r=1&ref=todayspaper&oref=slogin
 
Retire Soon said:
Fourteen companies are currently being investigated for subprime-related fraud. Included in this investigations are violations of possible accounting fraud and insider trading. The New York Times reported today that these violations are connected to loans made to borrowers with weak or subprime credit.

The inquiry which began last Spring includes companies in the financial industry and is focusing on mortgage lenders, loan brokers and even Wall Street banks that packaged the securities that were then sold to unsuspecting banks around the world.

The FBI has been warning for years that mortgage fraud there "is a significant and growing problem. In 2006, there were 35,000 suspicious activity reports. This is a very sizable increase from 2005 when there were 22,000 reports and 7,000 in 2003.

Many of the cases are now focusing on local and regional mortgage fraud rings that involve speculators, loan officers and brokers.

I think we're only now seeing tip of the iceberg in the criminal fraud that permeated the home loan industry over the past few years, which helped to further inflate the housing bubble. Unfortunately, the global economy will now have to pay the piper.

http://www.nytimes.com/2008/01/30/business/30fbi.html?_r=1&ref=todayspaper&oref=slogin
Click to expand...

Ummm, have you watched how this game is played over the past several years?

How about an example:

NY atty genl Spitzer and CA ins commissioner Garamendi announced investigations into supposed price fixing by insurance brokers with the collusion of some insurers. They spent a lot of time shooting their mouths off to the press, and then started investigating. They turned up some undoubtedly sleazy behavior and some downright illegal activities. What was the eventual outcome? Some companies had a rapid change in leadership. Some paid fines. Just about everyone in the industry changed their business methods even if they weren't involved so as to avoid doubt. That's about it.

My best guess is that we see at most the same outcome in these nnew FBI investigations.
 
Bloomberg.com article - Banks May Write Down $70 Billion, Oppenheimer Says

Bloomberg.com: Worldwide

The current rate of foreclosures and the subprime loan fisaco are contributing factors.

GOD BLESS:angel:
 
Marquette said:
Can anyone help with some good ol' fashion data mining?

I'd like to see a graph of percentage of homeowners from, say, 1908-2007. I'm curious if we're just seeing a revision to the mean. Was the runup in house prices simply supply repricing to restrict demand? At a macro level, it's long struck me that we have had an increase in homeownership which, while causing a housing boom, also caused prices to rise in order to restrict demand. At some point demand should drop to satisfy the mean and prices should follow accordingly.

Sure, there's lots of honest-to-goodness greed, fear, and doubt in the mix along the way, but I don't know if you should need to account for that with a macro view of the situation.
Click to expand...

back to 1965...

Homeownershiprateq42007.jpg (image)
 
CNN Money - Countrywide: From bad to worse

Countrywide's bad news - Jan. 29, 2008

Excerpts from article

NEW YORK (Fortune) -- Countrywide on Tuesday reported a loss of $422 million in the fourth quarter and revealed that an astounding one-third of its investment portfolio's sub-prime mortgage loans are delinquent.

The loss threw cold water on Countrywide chief operating officer Steve Sambol's confident assurances to investors in October that, "We view the third quarter of 2007 as an earnings trough, and anticipate that the company will be profitable in the fourth quarter and in 2008." Seen in this light, Countrywide's fourth-quarter loss, compared to a $621 million profit a year ago, is what the numerous class action attorneys circling Countrywide (CFC, Fortune 500) will surely call "an unfavorable fact." Countywide finished 2007 with a loss of $704 million.

End of xxcerpts

It appears that Country Club is in real bad trouble. Sambol's assurances remind me of the assurances that Ken Lay gave the shareholders, the employees, the investors, and the retirees of Enron.:duh:

GOD BLESS:angel:
 
Wags said:
CNN Money - Countrywide: From bad to worse

Countrywide's bad news - Jan. 29, 2008

Excerpts from article

NEW YORK (Fortune) -- Countrywide on Tuesday reported a loss of $422 million in the fourth quarter and revealed that an astounding one-third of its investment portfolio's sub-prime mortgage loans are delinquent.

The loss threw cold water on Countrywide chief operating officer Steve Sambol's confident assurances to investors in October that, "We view the third quarter of 2007 as an earnings trough, and anticipate that the company will be profitable in the fourth quarter and in 2008." Seen in this light, Countrywide's fourth-quarter loss, compared to a $621 million profit a year ago, is what the numerous class action attorneys circling Countrywide (CFC, Fortune 500) will surely call "an unfavorable fact." Countywide finished 2007 with a loss of $704 million.

End of xxcerpts

It appears that Country Club is in real bad trouble. Sambol's assurances remind me of the assurances that Ken Lay gave the shareholders, the employees, the investors, and the retirees of Enron.:duh:

GOD BLESS:angel:
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The difference is Bank of America is buying them, and will fire everyone and start over. Bad news or not, BOA bought them for $4 a share, and if mortgage rates continue to go down, there will be another re-fi boom, and BOA will be sitting pretty.........
 
FinanceDude said:
The difference is Bank of America is buying them, and will fire everyone and start over. Bad news or not, BOA bought them for $4 a share, and if mortgage rates continue to go down, there will be another re-fi boom, and BOA will be sitting pretty.........
Click to expand...

It takes equity to refinance a home. Most lenders are not willing to exceed a loan to value ratio of 80% on a first mortgage. Housing prices are now in free fall. Aside from the current federal government bailout program encouraging lenders to renegotiate the loans of subprime borrowers, where do you expect the housing equity to come from to support another refi boom?
 
Interesting Countrywide article ... looks like some real fire sales coming over the next couple years!

I view BOA purchase of Countrywide like American's purchase of TWA. Seemed like a good idea ... CEO gets a quick feather for his cap. But long term it's a mistake. Pieces of the company could have been bought for PENNIES on the dollar after bankruptcy.
 
NotSoonEnough said:
Being a complete neophyte, it is easy to get discouraged when I see something like this...

Bloomberg.com: Worldwide

I don't get it, why does a change in rating cause a loss to the bank...:confused:
Click to expand...

What is also discouraging is the blatant conflict of interest that exists between Standard & Poor and banks. It was American banks that paid S&P to receive the CDO's AAA ratings. It was also the banks who profited with this inflated rating in being able to facilitate the marketing of worthless paper to unsuspecting pension funds, hedge funds and banks around the world.
 
Retire Soon said:
It takes equity to refinance a home. Most lenders are not willing to exceed a loan to value ratio of 80% on a first mortgage. Housing prices are now in free fall. Aside from the current federal government bailout program encouraging lenders to renegotiate the loans of subprime borrowers, where do you expect the housing equity to come from to support another refi boom?
Click to expand...

Enter the mortgage insurers, who will cover the piece over 80% for a hefty fee.

Enter the loan modification programs. You can't refinance (translate: get this crappy loan off my books) unless the loan balance is $25k less than what you currently owe? Done.

Oh, and by the way, that 5% loan that was going to reset to an 8% loan 6 months ago? Now it will reset to a 5% loan, maybe less if the fed keeps cutting.
 
brewer12345 said:
Enter the mortgage insurers, who will cover the piece over 80% for a hefty fee.

Enter the loan modification programs. You can't refinance (translate: get this crappy loan off my books) unless the loan balance is $25k less than what you currently owe? Done.

Oh, and by the way, that 5% loan that was going to reset to an 8% loan 6 months ago? Now it will reset to a 5% loan, maybe less if the fed keeps cutting.
Click to expand...

There will not be a refi boom in 2008 for two reasons:

1) Many people will no longer be able to quafy for a loan because only prime loans are available.

2) Home equity is now a problem, especially given the number of people who bought in the past few years, refinanced in the past few years, or used up all of their home equity in the past few years.

Many lenders will go up to 90% or 95% LTV on a purchase, but could you please name some lenders that will exceed an 80% loan to value on the refinancing of a first mortgage for someone that does not already have a 90 or 95% loan?


Another Refinance Boom - With a Difference - Searchlight Crusade
 
Throw a rock in a room of bankers and you will hit one that will go over 80% on a first lien. So long as ether the borrower pays for PMI or the rate gets grossed up and the lender pays it.
 
brewer12345 said:
Throw a rock in a room of bankers and you will hit one that will go over 80% on a first lien. So long as ether the borrower pays for PMI or the rate gets grossed up and the lender pays it.
Click to expand...

With all due respect, most lenders offer a 90% or 95% loan on a purchase, but it is extremely rare to find one who offers higher than 80% LTV on a refinance. You can exceed an 80% LTV on a home equity loan, but rarely on a first trust deed. The exception would be if someone tried to refinance an existing 90% or 95% loan. But, with the costs of PMI being 1% for a 95% loan and 1/2% for a 90% loan I don't think it would be worth it for a borrower to do it, because these fees would come out of the loan proceeds at the close of escrow. The main problem we have today with borrowers who have PMI--is that they're more than likely upside down on their loan anyway are only going to qualify for a Bush/Paulson bailout mortgage rewrite. As the referenced article in my last post suggests, we may be in a mini-boom in refinances, but we will not see anything like we have seen during the few years when subprime financing was available.
 
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