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Politics : GOPwinger Lies/Distortions/Omissions/Perversions of Truth -- Ignore unavailable to you. Want to Upgrade?

To: TimF who wrote (145974)	11/6/2008 2:18:24 PM
From: geode00	Read Replies (1) \| Respond to of 173976

When you have a no doc loan you are not stating income so there is nothing to lie about by definition. The PROFESSIONAL lender does not have to provide a no doc loan or, if the property is worthwhile, the down payment is high and the credit report is good, provide a no doc loan at a higher rate to account for risk. I know people who use no doc loans because they don't want someone snooping into their accounts and they can afford a big down payment and have excellent credit. It would be foolish to get rid of this vehicle since they are not high risk even though they carry a premium on the rates. The problem with the mortgage market was not the provision of no doc loans which have been used for a long time but the securitization of mortgages creating a risk-free (or low risk) fee-generating vehicle for those making the loans. That's just it. The amateurs have paid through the nose for their mistakes by demolishing their credit and losing their home and whatever they have put into it. The professionals walk away with their fees and commissions and, sometimes, a government bailout for their sorry rear ends. The amount going to the professional gamblers is much larger than that going to the amateurs. There is also a problem of massive fraud on the part of the professionals. There is fraud (see Countrywide's multibillion dollar settlement) on the part of those who made the original loans and those who were buying and selling the CDOs based (loosely) on those loans. As I have said before, this is not just about mortgages. The CDO's include commercial loans as well.

To: TimF who wrote (145974)	11/6/2008 2:28:43 PM
From: geode00	Respond to of 173976

Where is the missing $6 trillion? Headlines continue to blame problems on ’subprime’ borrowers but the excuse is getting old and no longer holds up to close inspection. I suggest to you that many of these borrowers had good credit at one time. To make the U.S. economy look good, and to make lenders, brokers, and investors very wealthy,that wealth had to be created. Appraisals increased, new mortgage products were invented, and interest rates dropped. Homeowners were told of the new wealth they had in their homes, and they took advantage of it. I estimate that phantom wealth at approximately $3 trillion (USD). At the same time collaterized debt obligations were modified to include credit card debt. Obviously one’s home improvement cardit card might be used to purchase collateralized merchandise. When you use your credit card to buy hard goods such a refrigerators the item can be collateralized. Credit card issuers modified their terms of service to collateralize everything. Thus CDO’s were marketed as safe collateralized investments. In reality it did not work out that way, accounting for the other $3 trillion over time. Now that investors don’t trust investment vehicles such as CDO’s and mortgage backed securities analysts are saying it is a subprime problem, caused by poor people with less than stellar credit, who cannot pay their bills. I say it is based on the missing $6 trillion in manufactured wealth that really does not exist. Not too long ago I wrote an article explaining how one could manufacture a $10 million credit card CDO with nothing but high fees, a one-time cost to issue the card, and a very low credit limit primarily used up by the fees. Nothing changed hands but a piece of worthless plastic and a contract that was basically an IOU. Even with a $300 credit limit this fantasy, if sold to enough people, becomes $10 million in created wealth. That becomes the problem, but $6 trillion in manufactured wealth becomes a worldwide crisis that cannot be blamed entirely on people with bad credit. mortgageblues.us ============ Credit Card Bond Sales at Zero, First Time Since 1993 (Update1) By Sarah Mulholland Nov. 5 (Bloomberg) -- Credit card companies were shut out of the market for bonds backed by customer payments in October for the first time in more than 15 years, as investors shunned the debt amid the global credit freeze. ... bloomberg.com