27% of Homes Underwater on Mortgages

[boedicca]

It's only a reach to those who don't understand the way the world works.

At least you admit it.

Heh.

You're the one who said it was a reach, not I, you sad little moron.

 

[boedicca]

Once we had laws in place that kept this from happening.

They worked.

Then they ended them.

Then the market ate our shorts.

No. Once we had reasonable lending standards in which banks were responsible for their losses.

Then the government told banks, after much lobbying by community organizers, to change their lending standards to be "subjective" ones so that people who were not financially qualified could get the houses to which they were "entitled".

The banks then demanded and received "insurance" from the government to protect them from losing money on these loans; Fannie Mae and Freddie Mac gobbled them up with the backing of taxpayer dollars.

Once the standards were loosened for some, they were loosened for all, and a speculative housing bubble formed. And then it burst.

The dishonest people made money or got to live in houses for free. The honest ones lost money and are now paying for the bail out.

And all of this is the natural, logical result of Big Government Cronyism interference and manipulation of a market place for the benefit of the Cronies.

 

[Samson]

Let's all ignore the pressure from Government and 'community' groups put on the banks to lend to people who could not afford to pay their loans. Let's pretend that didn't happen. Blame the banks.... that's the easy answer. It's not the right answer but it is the easy one.

Its difficult for me to feel very sorry for Banks. I don't believe they were brought kicking and screaming to the lending table for a couple of reasons, both admittedly empirical:

A. How many credit card offers do you receive every week? I get about 2-3. The object seems to be to offer credit until everyone on earth has maxed out their debt.

B. While standing in line behind people half my age, mortgage companies were offering them 50 YEAR LOANS so they could purchase homes that it had taken me a lifetime to afford to buy in 30 years.

 

[boedicca]

They were pikers.

Mortgages in Japan can be for 100 years!

 

[8537]

You are sorely misinformed.

No, I'm not. You've been proven wrong about this many times in the past.

Fannie Mae and Freddie Mac gobbled up a great many of these loans, and have received billions and billions of taxpayer dollars as the loans have gone bad.

Fannie and Freddie:

A. Only bought conforming loans. Most loans in the most over-heated markets were out of reach, as were the most toxic no doc / no downpayment loans. Those million-dollar condos being flipped in Florida? the GSE's couldn't play that game.

B. Lost share of the subprime market as it expanded. They both lost significant market share between about 2002 and 2007. You know why? Because they weren't allowed to participate in the most toxic repurchase agreements. You know who they lost that market share to? Asset-backed securities dealers, a wholly unregulated industry.

 

[Care4all]

Cause and effect.

The speculation was ENABLED BY THE GOVERNMENT by using tax payer money to derisk no doc / no down payment loans. Without such loans, speculators would not have been able to bid up prices without ponying up some of their own money.

And the Native American nonsense is not even worthy of a response.

huh? How did they DERISK those no doc loans. Do you have a link?

there was NO SUCH thing.... the banks and Wall street did this on their own. Fanny and freddie DID NOT BACK those kind of loans....so who are you talking about?

 

[boedicca]

Cause and effect.

The speculation was ENABLED BY THE GOVERNMENT by using tax payer money to derisk no doc / no down payment loans. Without such loans, speculators would not have been able to bid up prices without ponying up some of their own money.

And the Native American nonsense is not even worthy of a response.

huh? How did they DERISK those no doc loans. Do you have a link?

there was NO SUCH thing.... the banks and Wall street did this on their own. Fanny and freddie DID NOT BACK those kind of loans....so who are you talking about?

They derisk them by selling them off like hot potatoes. Fannie Mae and Freddie Mac bought up a large portion of them.

How did we get here? Let's review: In order to curry congressional support after their accounting scandals in 2003 and 2004, Fannie Mae and Freddie Mac committed to increased financing of "affordable housing." They became the largest buyers of subprime and Alt-A mortgages between 2004 and 2007, with total GSE exposure eventually exceeding $1 trillion. In doing so, they stimulated the growth of the subpar mortgage market and substantially magnified the costs of its collapse

http://online.wsj.com/article/SB122212948811465427.html

 

[Truthmatters]

Once we had laws in place that kept this from happening.

They worked.

Then they ended them.

Then the market ate our shorts.

No. Once we had reasonable lending standards in which banks were responsible for their losses.yes and it was Glass Steagal which prohibited the industry from lending and Selling off the loans as financial offereings, it was dismantled and then they could consolidate and make the loans and then NEVER worry about the loan being paid back or not becuase they could fake the ratings labels on the financial product and sell them as triple AAA.

Then the government told banks, after much lobbying by community organizers, to change their lending standards to be "subjective" ones so that people who were not financially qualified could get the houses to which they were "entitled".Do you really think there was no such thing as a subprime loan before this program exsisted? BTW what % of all the loans did CRA mandate? you see they mandated numbers were FAR below the number of subprime loans written. With those two facts in your back pocket you would have to be mentally handicapped to continue to insist that CRA caused this

The banks then demanded and received "insurance" from the government to protect them from losing money on these loans; Fannie Mae and Freddie Mac gobbled them up with the backing of taxpayer dollars.

Once the standards were loosened for some, they were loosened for all, and a speculative housing bubble formed. And then it burst.Oh you mean once the regulations no longer required standards of practice? Yes you are right once the regulations were killed the corps went right into making a profit at the expense of the overall market.

The dishonest people made money or got to live in houses for free. The honest ones lost money and are now paying for the bail out.The dishonest people were the lenders who lied about the triple AAA ratings of the financial loan packages they were selling.

And all of this is the natural, logical result of Big Government Cronyism interference and manipulation of a market place for the benefit of the Cronies.

Lack of regulations and you yourself said it here

 

[8537]

They derisk them by selling them off like hot potatoes.

Selling a security doesn't remove the risk associated with the underlying product.

 

[Care4all]

Cause and effect.

The speculation was ENABLED BY THE GOVERNMENT by using tax payer money to derisk no doc / no down payment loans. Without such loans, speculators would not have been able to bid up prices without ponying up some of their own money.

And the Native American nonsense is not even worthy of a response.

huh? How did they DERISK those no doc loans. Do you have a link?

there was NO SUCH thing.... the banks and Wall street did this on their own. Fanny and freddie DID NOT BACK those kind of loans....so who are you talking about?

They derisk them by selling them off like hot potatoes. Fannie Mae and Freddie Mac bought up a large portion of them.

How did we get here? Let's review: In order to curry congressional support after their accounting scandals in 2003 and 2004, Fannie Mae and Freddie Mac committed to increased financing of "affordable housing." They became the largest buyers of subprime and Alt-A mortgages between 2004 and 2007, with total GSE exposure eventually exceeding $1 trillion. In doing so, they stimulated the growth of the subpar mortgage market and substantially magnified the costs of its collapse

Blame Fannie Mae and Congress For the Credit Mess - WSJ.com

i read the article when it was printed....it is dated, lots of new info has come out since then...

NONE of what fannie and fred backed was NO DOC loans, NONE.

 

[boedicca]

They derisk them by selling them off like hot potatoes.

Selling a security doesn't remove the risk associated with the underlying product.

It does for the entity which sold the mortgage to someone else.

 

[boedicca]

huh? How did they DERISK those no doc loans. Do you have a link?

there was NO SUCH thing.... the banks and Wall street did this on their own. Fanny and freddie DID NOT BACK those kind of loans....so who are you talking about?

They derisk them by selling them off like hot potatoes. Fannie Mae and Freddie Mac bought up a large portion of them.

How did we get here? Let's review: In order to curry congressional support after their accounting scandals in 2003 and 2004, Fannie Mae and Freddie Mac committed to increased financing of "affordable housing." They became the largest buyers of subprime and Alt-A mortgages between 2004 and 2007, with total GSE exposure eventually exceeding $1 trillion. In doing so, they stimulated the growth of the subpar mortgage market and substantially magnified the costs of its collapse

Blame Fannie Mae and Congress For the Credit Mess - WSJ.com

i read the article when it was printed....it is dated, lots of new info has come out since then...

NONE of what fannie and fred bought was NO DOC loans, NONE.

You're going to have to provide some proof to back up that claim. The former Chief Credit Officer of Fannie Mae testified before Congress that Fannie bought tons of subprime and Alt-A loans.


Fannie Mae and Freddie Mac engaged in “an orgy of junk mortgage development” that turned the two mortgage-finance giants into vast repositories of subprime and similarly risky loans, a former Fannie executive testified on Tuesday.

The mortgage development, which began in 2005 and lasted until at least last year, happened as senior executives at the two government-sponsored enterprises ignored repeated warnings from internal risk officers that they were delving too deeply into dangerous territory, according to internal documents released at a Congressional hearing in Washington. The two companies have been taken over by the government.

The former executive, Edward J. Pinto, who was chief credit officer at Fannie Mae, told the House Oversight and Government Reform Committee that the mortgage giants now guarantee or hold 10.5 million nonprime loans worth $1.6 trillion — one in three of all subprime loans, and nearly two in three of all so-called Alt-A loans, often called “liar loans.”

Such loans now make up 34 percent of the total single-family mortgage portfolios at Fannie Mae and Freddie Mac, a level that will link them to eight million foreclosures, or one in six, in coming years, Mr. Pinto said. The nonprime loans “have turned the American dream of homeownership into the American nightmare of foreclosure,” he said.

The hearing was the latest by Congress on the collapse of the two companies, which guarantee half of all mortgages nationwide and are the engine of the housing market. The former chief executives of Fannie Mae and Freddie Mac, Daniel H. Mudd and Richard F. Syron, and their predecessors, Franklin D. Raines and Leland C. Brendsel, faced pointed questioning from lawmakers....

http://www.nytimes.com/2008/12/10/business/10fannie.html?_r=1

 

[8537]

They derisk them by selling them off like hot potatoes.

Selling a security doesn't remove the risk associated with the underlying product.

It does for the entity which sold the mortgage to someone else.

that doesn't remove the risk, it doesn't "derisk" anything. it simply exchanged a fixed revenue for a variable one.

 

[boedicca]

Selling a security doesn't remove the risk associated with the underlying product.

It does for the entity which sold the mortgage to someone else.

that doesn't remove the risk, it doesn't "derisk" anything. it simply exchanged a fixed revenue for a variable one.

B'loney. If a bank packages up a portfolio of mortgages to somebody else, the bank no longer owns them, no longer records them on its balance sheet, no longer collects the payments - all of that passes to somebody else. The risk is removed from the originator and assumed by somebody else.

That is derisking. That's what Fannie Mae and Freddie Mac did in their enabler role in this mess.

 

[Care4all]

swiss bank and Deutch bank sold their MBS's, in the BILLIONS, to fannie and freddie as triple A securities is what I had read?

 

[WillowTree]

Fannie and Freddie, and the idiots in dc still won't address it.

 

[8537]

It does for the entity which sold the mortgage to someone else.

that doesn't remove the risk, it doesn't "derisk" anything. it simply exchanged a fixed revenue for a variable one.

B'loney. If a bank packages up a portfolio of mortgages to somebody else, the bank no longer owns them, no longer records them on its balance sheet, no longer collects the payments - all of that passes to somebody else. The risk is removed from the originator and assumed by somebody else.

That is derisking. That's what Fannie Mae and Freddie Mac did in their enabler role in this mess.

The security is not de-risked. The risk has not been removed. The firm has just exchanged that risk for a premium and shifted the risk. Once again: The risk is not removed.

... and FM and FM didn' buy the riskiest securities - those were bought in the private sector b/c FM and FM weren't allowed to buy nonconforming mortgages. That's how FM's share of the subprime market declined as the market itself grew so dramatically between 2002 and 2007.

 

[8537]

Fannie and Freddie, and the idiots in dc still won't address it.

Think Tanks To Testify On GSE Reform Wed,Obama Proposal By Fri | iMarketNews.com

Won't what?

WASHINGTON (MNI) - The Obama Administration is expected to release a white paper Friday with its proposals to reform the U.S. housing finance system and restructure government-sponsored entities Fannie Mae and Freddie Mac.

 

[Soggy in NOLA]

that doesn't remove the risk, it doesn't "derisk" anything. it simply exchanged a fixed revenue for a variable one.

B'loney. If a bank packages up a portfolio of mortgages to somebody else, the bank no longer owns them, no longer records them on its balance sheet, no longer collects the payments - all of that passes to somebody else. The risk is removed from the originator and assumed by somebody else.

That is derisking. That's what Fannie Mae and Freddie Mac did in their enabler role in this mess.

The security is not de-risked. The risk has not been removed. The firm has just exchanged that risk for a premium and shifted the risk. Once again: The risk is not removed.

... and FM and FM didn' buy the riskiest securities - those were bought in the private sector b/c FM and FM weren't allowed to buy nonconforming mortgages. That's how FM's share of the subprime market declined as the market itself grew so dramatically between 2002 and 2007.

You don't de-risk a particluar item, you de-risk your postion.

 

[8537]

B'loney. If a bank packages up a portfolio of mortgages to somebody else, the bank no longer owns them, no longer records them on its balance sheet, no longer collects the payments - all of that passes to somebody else. The risk is removed from the originator and assumed by somebody else.

That is derisking. That's what Fannie Mae and Freddie Mac did in their enabler role in this mess.

The security is not de-risked. The risk has not been removed. The firm has just exchanged that risk for a premium and shifted the risk. Once again: The risk is not removed.

... and FM and FM didn' buy the riskiest securities - those were bought in the private sector b/c FM and FM weren't allowed to buy nonconforming mortgages. That's how FM's share of the subprime market declined as the market itself grew so dramatically between 2002 and 2007.

You don't de-risk a particluar item, you de-risk your postion.

Indeed.