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Strategies & Market Trends : New US Economy Policy -- Ignore unavailable to you. Want to Upgrade?

To: Arthur Tang who wrote (366)	7/18/2007 7:41:39 AM
From: Arthur Tang	Read Replies (1) \| Respond to of 435

Subprime in the industry is not known as sub credit worthiness. Subprime mortgage is the mortgage sold below prime interest rate. Which is then sold to Federal government for money printed just off the press. Since it is just newly printed money; any interest rate is better than nothing, as income for the US government, in the eyes of Alan Greenspan. Wall street had mistaken the meaning of the word and actual practice in the remortgage business. Back then in the late 1980s, the home mortgage was 13% interest rate secured by the house and personal net worth. Federal reserve banks allowed remortgage companies to sell mortgage at a reduce rate since 1990s, then competition forced interest rate of mortgages down to 1%. Which is called subprime mortgage. No one pays 13% mortgage any more since 1995. Then Freddie Mac and Fannie Mae got into the subprime mortgage business, buying and selling. This is why subprime in the news, reveals the potential of fraud. Selling fixed income without the backing of any high interest mortgages to back it? Mortgages have to be insured by FHA and VA; so that personal net worth is not in question?