The Real Culprits In This Meltdown, no McCain aides listed...

None of you can refute the truth in the article, it's sad to watch you guys try to muster up the vile that you are.

Can just one of refute the facts posted in the OP?

I'll not hold my breath.

No bank in their right mind would have made those loans before the CRA. I mean really, loan large amounts of money to people that obviously can't pay it back?

The Rest of the Meltdown Story
By Neal Boortz

What in the world is going on here?

You’ve seen the headlines, and you heard of the failures and buyouts. Lehman Brothers, Bear Stearns, Merrill Lynch, AIG; all big names and all in big trouble. Then those mysterious quasi-government agencies with names like Freddie and Fannie become wards of the state and you learn that you and your fellow taxpayers are potentially on the hook for tens of billions of dollars. At the end of the week Washington Mutual is looking for a buyer, and you start to wonder about the security of your own bank and your own savings account. Let’s change that ad copy to WaMu -- boo hoo.

Somewhere in the back of your mind you understand that this is all tied somehow to bad mortgages. If you start reading a bit further to enhance your understanding you run into terms like Mortgage Backed Securities (MBS) and credit-default swaps, whatever in the world those are. Read further and you find out that a combination of falling home prices and mortgage defaults have put many investment banks and other financial institutions in deep puddin’. All this reading, all this watching the talking heads on TV, and you still don’t really know what in the world is going on here.

Fear not. I’m here to help. I know … I’m just another talk show host; but the fact is that when the stage was being set for the problems we’re seeing today I was making most of my money as a real estate lawyer .. closing loans for some of the very institutions that are the tank today. This rather unique combination " closing lawyer and radio talk show host " gave me a front row seat to the politicization of mortgage loans that led us to today’s headlines.

OK .. so we all know that a lot of really bad real estate loans were made. The political class would sure love for us to believe that the blame here rests squarely on “greedy” (try to define that word) mortgage brokers and lenders. The truth is that most of the blame rests on political meddling in the credit decisions of these mortgage lenders.

Twenty years ago the buzz-word in the media was “redlining.” Newspapers across the country were filled with hard-hitting investigative reports about evil and racist mortgage lenders refusing to make real estate loans to various minorities and to applicants who lived in lower-income neighborhoods. There I was closing these loans in the afternoons, and in the mornings offering a counter-argument on the radio to these absurd “redlining” claims. Frankly, the claims that evil mortgage lenders were systematically denying loans to blacks and other minorities were a lot sexier on the radio than my claims that when credit histories, job stability, loan-to-value ratios and income levels were considered there was no evident racial discrimination.

Political correctness won the day. Washington made it clear to banks and other lending institutions that if they did not do something .. and fast .. to bring more minorities and low-income Americans into the world of home ownership there would be a heavy price to pay. Congress set up processes (Research the Community Redevelopment Act) whereby community activist groups and organizers could effectively stop a bank’s efforts to grow if that bank didn’t make loans to unqualified borrowers. Enter, stage left, the “subprime” mortgage. These lenders knew that a very high percentage of these loans would turn to garbage " but it was a price that had to be paid if the bank was to expand and grow. We should note that among the community groups browbeating banks into making these bad loans was an outfit called ACORN. There is one certain presidential candidate that did a lot of community organizing for ACORN. I won’t mention his name so as to avoid politicizing this column.

These garbage loans to unqualified borrowers were then bundled up and sold. The expectation was that the loans would be eventually paid off when rising home values led some borrowers to access their equity through re-financing and others to sell and move on up the ladder. Oops.

Right now this crisis is being sold to the American public by the left as evidence the failure of the free market and capitalism. Not so. What we’re seeing is the inevitable result of political interference in free market economics. Acme bank didn’t want to loan money to Joe Homebuyer because Joe had a spotty job history, owed too much money on his credit cards, and wasn’t all that good at making payments on time. The politicians told Acme Bank to figure out a way to make that loan, because, after all, Joe is a bona-fide minority-American, or forget about opening that new branch office on the Southside. The loan was made under politicial pressure; the loan, with millions like it, failed " and now we are left to enjoy today’s headlines.

So … why aren’t you reading the whole story in the mainstream media? Come on, are you kidding me? Do you really expect the media to blame this mess on deadbeat borrowers and political interference in the free market when it is so easy to put the blame on greedy lenders and evil capitalists? Remember … there’s an election going on. One candidate is decidedly anti-capitalist. Do the math.

What does "subprime" mean when it comes to mortgages?
The term subprime refers to any loan which would not fall into the category of an A or A- ("prime" mortgages). A and A- (A- refers to just outside the scope of the best credit situation) loans are basically for those people who have good or excellent credit, no judgments or liens, and gainful employment for the past two years (not in all situations, but usually). The loans that are pruchased on the secondary market by mortgage giants Fannie Mae & Freddie Mac are generally referred to as A paper. These are usually the best rates available and most often the ones you will see advertised online, in print, and on tv.

However, not everyone fits into the neat little credit situation that A paper requires. These loan are referred to as subprime or B, C, & D paper. This is where people with bruised or bad credit will likely find themselves getting a loan. The terms are generally a little worse and many of the loans do contain prepayment penalties. That doesn't mean that these loans can't be beneficial. For someone who has had extenuating circumstances, a subprime loan can offer them a period of time to stay in their home and repair their credit. This is also the main reason most subprime loans contain short terms. Most subprime loans will be a 2 year ARM with the thinking that a borrower will use those two years to clean up the issues that forced them to obtain a subprime mortgage. Life can really throw some unfortunate situations at people, so sometimes these loans are really necessary after bankruptcy, job loss or medical problems. Certain banks specialize in this type of lending and most reputable brokers or bankers will have a wide range of programs to suit any credit situation and help any borrower that walks through the door.

He's saying that 20 years ago, the PC people started getting involved and lobbying for the governemnt to step in and force lending institutions to start making sub prime loans which resulted in the 99 make over.

A subprime loan (IMO) is one that is made to people with a cloudy credit record. Unfortunately, these people do tend to be minorities and low income Americans. I do believe that a lot of speculators also added to this whole fiasco. People buying houses with interest only loans in hopes of turning them around for a profit.

I did find this on the internet:

Quote:

What does "subprime" mean when it comes to mortgages?
The term subprime refers to any loan which would not fall into the category of an A or A- ("prime" mortgages). A and A- (A- refers to just outside the scope of the best credit situation) loans are basically for those people who have good or excellent credit, no judgments or liens, and gainful employment for the past two years (not in all situations, but usually). The loans that are pruchased on the secondary market by mortgage giants Fannie Mae & Freddie Mac are generally referred to as A paper. These are usually the best rates available and most often the ones you will see advertised online, in print, and on tv.

However, not everyone fits into the neat little credit situation that A paper requires. These loan are referred to as subprime or B, C, & D paper. This is where people with bruised or bad credit will likely find themselves getting a loan. The terms are generally a little worse and many of the loans do contain prepayment penalties. That doesn't mean that these loans can't be beneficial. For someone who has had extenuating circumstances, a subprime loan can offer them a period of time to stay in their home and repair their credit. This is also the main reason most subprime loans contain short terms. Most subprime loans will be a 2 year ARM with the thinking that a borrower will use those two years to clean up the issues that forced them to obtain a subprime mortgage. Life can really throw some unfortunate situations at people, so sometimes these loans are really necessary after bankruptcy, job loss or medical problems. Certain banks specialize in this type of lending and most reputable brokers or bankers will have a wide range of programs to suit any credit situation and help any borrower that walks through the door.

Foreclosures are not only a problem of poor or middle class homeowners. The foreclosure crisis has become so widespread that it is affecting the wealthy population of the United States.

As a rule, expensive houses do not go into foreclosure unless there has been a serious illness or death in the family and this has affected the finances of the family. However, this is no longer the reality.

Homes in wealthy areas that had been purchased for eight hundred thousand dollars or more are now in foreclosure and are being sold for about six hundred thousand dollars. The fact that homes in wealthy areas are going into foreclosure is a clear indication that the housing market is worse than anyone had anticipated. It is clear that foreclosures are affecting the value of homes at a level that not many had thought possible.

It is evident that the credit problem that is reaching all sectors of finance is beginning to affect individuals of all income levels and it will continue doing this unless some solution is found and the housing market improves.

GREENWICH, Conn. " This wooded town of roughly 60,000 on Long Island Sound " home to dozens of hedge funds, many millionaires and more than a few billionaires " is one of the wealthiest enclaves in the country. But even Greenwich is not immune to the wave of home foreclosures sweeping the nation.

On Stanwich Road, for example, a house worth $2.6 million is close to going on the block. On Hettiefred Road, the owner of a 2,720-square-foot, four-bedroom colonial featuring a luxury kitchen, swimming pool and tennis court, has been threatened with foreclosure for months. Several dozen other owners in Greenwich have received foreclosure notices this year.

Neal Boortz--a notorious right winger--will never admit that many agents systematically barred minorities from "white" neighborhoods by implying that they would have difficulties meeting their mortgage payments while they encouraged white applicants. Anybody who has knowledge of the real estate industry during the eighties knows this. Why can't black and hispanics live in neighborhoods that are predominantly white? I am sure that the large majority have met their mortgage payments on time.

Redlining was racist and everybody knows it!!!

Yes, the sub-prime loans are inherently the problem.

More people suddenly became able to acquire a loan to buy a house they could not afford. Now, I don't know if the laws of economics work in liberal land, but in America, when more people are looking for homes, suddenly prices go up! Imagine that...

Now, housing prices go up, more and larger sub-prime loans are made and now you have people that couldn't afford a $50k house buying a $75k house. You also have people looking at the low interest rates and moving up from their $100k houses to $200k houses which were only really worth $100k before the housing bubble.

So, now you have people owing more on their homes then the home is actually worth and the stupid government is allowing people to just walk away from them. So yes, the housing bubble popped and bot the rich and the poor are getting foreclosed on, but the reason that is happening is that the bubble existed to begin with. Which was started by the sub-prime mortgages.

Who really gives a **** what banks and mortgage resellers did with the mortgage after it was made. That doesn't make the borrower any less culpapble for the loan they took. That banks are losing money hand over fist is their own damn fault and it sucks that we have to bail their stupid asses out for it.

Who really gives a **** what banks and mortgage resellers did with the mortgage after it was made

Wow, good thing I had you around to explain the basics of the subprime mortgage market, McG; I've only been discussing it here and elsewhere for two years now, long before any of you Republicans thought it would be a problem at all. What a stroke of luck on my part, that someone could explain the perfectly obvious.

Quote:

Who really gives a **** what banks and mortgage resellers did with the mortgage after it was made

America gives a ****, because this is why we are having the problems now, ya maroon. You truly don't understand what is going on, do you?

If the rules were still intact preventing the bundling of sub-prime mortgages into securities - thanks Phil Gramm! Good work! - then the losses from sub-prime mortgages would be limited to those businesses who typically deal with mortgages. Instead, a financial shell game was created out of them, and ALL the banks and trading houses got into it. 'what was done after the mortgage was made' is what has lead to our financial crisis. The actual failing mortgages themselves are a pittance compared to the liquidity problems that are facing our markets today. How can you not understand this basic point, McG?

Cycloptichorn