the mortgage crisis

[VitaMan]

What caused the mortgage crisis and collapse ?
The telltale phrase from that period......."we were all making money."

[Chung Tran]

Originally Posted by VitaMan

What caused the mortgage crisis and collapse ?
The telltale phrase from that period......."we were all making money."

Mortgages were wrapped in a new, bond-like derivative package, that were sold to everyday investors. When the housing bubble popped, it infiltrated a large swath of the entire financial market, like a bond price collapse. Nobody could sell those derivative instruments at that point, no buyers, no value.

[Ripmany]

1. Banks charge more interest to high risk bowwoer.
2. Some of there lost there job.
3. Many house were under water people could make payment or do maintenance.
4. When banks foreclosure there only got a faction of there money back.
5. This cause some banks to bankcrup
6. This cause more job loses and housing go down even more which cause a bigger problem.
7. There was government laws put in place and and fimely slow down.

[Ripmany]

1. Banks charge more interest to high risk bowwoer.
2. Some of there lost there job.
3. Many house were under water people could make payment or do maintenance.
4. When banks foreclosure there only got a faction of there money back.
5. This cause some banks to bankcrup
6. This cause more job loses and housing go down even more which cause a bigger problem.
7. There was government laws put in place and and fimely slow down.

[EverybodyLovesFangFang]

Originally Posted by Ripmany

1. Banks charge more interest to high risk bowwoer.
2. Some of there lost there job.
3. Many house were under water people could make payment or do maintenance.
4. When banks foreclosure there only got a faction of there money back.
5. This cause some banks to bankcrup
6. This cause more job loses and housing go down even more which cause a bigger problem.
7. There was government laws put in place and and fimely slow down.

"their" would be more appropriate...

[RetiredSubmariner]

Originally Posted by VitaMan

... "we were all making money."

Because all the banks and mortgage companies were making money, they began to skip required steps.

I had a building with three apartments. When I wanted to re-finance it the mortgage lender skipped some of the steps, and we were in business. It added to their profit margin.

I had no idea, just another day.

But during the Recession, we lost all of our tenants and had to default on the mortgage. It was then that the courts caught how the lenders had been cutting corners. So they were forbidden from doing a straight foreclosure on us.

[dilbert firestorm]

.

[VitaMan]

The mortgage backed securities were the symptom, not the cause. The cause was homeowners began to default on their mortgages. The mortgage lenders are at fault for not doing their fiduciary duty, just like the accountants did with Enron. They enabled the failure.


It kind of went like this:


Need a mortgage ? no problem
Don't have a down payment ? no problem
Can't pay the interest ? no problem, we will add it to the back end of the loan (collect our fees now)
Interest rate too high ? no problem, you can pay a low introductory interest rate for the first 6 months, then start to pay the higher interest rate later

Can't afford payments ? no problem, you don't have to make any payments for the first year, then when your income is higher, you can start to pay (we will add it to the back end of the loan, and collect our fees now)


Is it surprising at all that homeowners eventually could not pay their mortgage loans ?
Most of them should not have received a mortgage loan.


Of course, if it were Mr. Trumps house, an immediate lawsuit for predatory lending would begin.