Hucklebee, Obama and Kenya.

[LexusLover]

Originally Posted by Jackie S

...in some dirtbag system like exist in Chicago

And now he has his "foot" in the door for 2012 ... Rah, rah, rahm.

[djdude]

Originally Posted by Jackie S

Hey Chrome1996, sounds like the President earned his political chops in some dirtbag system like exist in Chicago.

Oh wait, he did.

Well, just as long as we don't get another craptastic President from Texas any time soon. Not sure the country could stand another LBJ or GWB.

[Bebe Le Strange]

Originally Posted by LexusLover

Sounds like you bear some responsibility for defrauding these people who...

... were being "pushed" into borrowing what they cannot pay back.

FYI: "Lenders" do not make money on bad loans .....only

1. title companies and the insurers they represent,
2. closers, like yourself,
3. loan brokers, of course,
4. realtors, and
5. the lawyers who draw up the closing documents.

They all get paid "up front" from the loan proceeds and "down payment"!

Title companies do not make money on loans period. They sell Title Insurance. Nor do Realtors make money off loans, bad or otherwise. They get paid to help people find homes, or sell homes. Their money is made on the commission of the sale on the homes.

The lenders and the stock market people all made money off the bad loans they were pushing. Your blaming the wrong people here.

[LexusLover]

Originally Posted by Bebe Le Strange

Title companies do not make money on loans period. They sell Title Insurance. Nor do Realtors make money off loans, bad or otherwise. They get paid to help people find homes, or sell homes. Their money is made on the commission of the sale on the home

That's funny. Every time a refi or new loan closes the title company makes money, the closer makes money, and on the purchase of the property the realty makes money ... it ALL comes from the LOANS/Down payment!

Otherwise title companies would ONLY close cash deals, they have to close deals with loans to survive. My guess is probably 90% of their deals, if not more, are loans ....

........ ever heard of a "mortagee's policy"?

From where does the CASH they are paid come???????????? Trees?

Of course, they make money on the loan and it is UPFRONT, off the TOP!

And there you are (as you admit) closing those loans to dumb shits that are in over their heads ..... AND you admittedly know it when you close!

How can a lender, who just borrowed $100,000 to loan to a house buyer, make money on a loan when the deal closes ... ? They don't. Period.

I'm reading a post from the "correct" person to be responsible ... the one who KNOWS the borrower cannot pay it, but goes ahead and closes the deal to make a buck.

[Bebe Le Strange]

Originally Posted by LexusLover

How can a lender, who just borrowed $100,000 to loan to a house buyer, make money on a loan when the deal closes ... ? They don't. Period.

Of course the lender is making money..lol. Bad loan or not. They make money on the interest and all the fees they charge. If the owner defaults on the loan they still make money in the foreclosure process..


Lexus you I and both know that what has happened as a direct result of the lenders practices, and that of the stockers has nothing to do with a Title company selling Title insurance nor Realtors selling / buying homes for prospective buyers. The lenders are the ones directly responsible. Your shifting blame where it does not belong. A mortgagees policy is to cover the lender against title defects. Just as the owners title policy does the same for the owner of the home. There again, has nothing to do with what the lenders and stockers did.

[LexusLover]

Originally Posted by Bebe Le Strange

Of course the lender is making money..lol. Bad loan or not. They make money on the interest and all the fees they charge. If the owner defaults on the loan they still make money in the foreclosure process..


Lexus you I and both know that what has happened as a direct result of the lenders practices, ..............

First (last), how do you "know" what I "know" .... ..... you don't! Not a clue!

Secondly, this statement makes no logical sense:

"Of course the lender is making money..lol. Bad loan or not."

Lender A loans Borrower B $100,000 at 5% interest with payments of $1,200 a month on a "95% loan."

Borrower B makes 12 payments and defaults ... that's $14,400 paid.

So how does Lender A make any money? That is a "shortfall" of about $85,000!

Foreclosure?

The Lender bids in the house and takes care of the house in ORE, while trying to sell it ........ empty and trashed from the Borrower B, who abandoned the house in trashed condition (typical of foreclosures).

The house resells at 70% of the Borrower B's purchase price after paying $10,000 to $15,000 in attorney fees, foreclosure fees, trustee's commissions, and closing costs ........ a conservative estimate.

How has the Lender made any money on a "bad loan"?

Have you ever heard of a "deficiency" law suit?

So, no I do not agree with you. Like I said: you are a participant in the real estate mortgage business scam and fraud upon the public (as you claim), and I recognize that it is "easier" for you to blame others than blame yourself. If you really believe that the borrowers are not at fault, then you should look yourself in the mirror and point your finger at yourself, rather than at some obscure "investment banker"!

But the bottom line is that people who borrow money they cannot repay ... for whatever their motivation ... do so of their own free will and voluntarily. People should hold them selves accountable for their decisions .. good and bad. ... instead of trying to find someone to blame for their own bad decisions.

[essence]

Can we keep on topic?

The good news is that nobody is trying to defend Huckabee, everybody thinks his comments were assinine, so we can keep faith that the general population will also see his views for what they are.

Or maybe ECCIE members are not representative, and there aren't too many right wing Chrstians fundamentalists flat earthers amongst us....unless they are lurking very UTR!

[LexusLover]

Originally Posted by essence

Can we keep on topic?

.... so we can keep faith that the general population will also see his views for what they are.

Yes.

His views were factually incorrect....apparently.

[essence]

OK, I agree, everybody agreeing is so boring, much better to have a good discussion....

In UK at least, the ones signing papers were the ones who were open to fraud. The professional advising them have no liability.

So, for example:

- if you exagerate income a bit or
- don;t declare where the deposit is coming from
- give the valuation price rather than sale price (where sale price is lower than valuation price for below market value properties)

then the purchaser signing the mortgage document is the one committing fraud, even though they don't read it and the adviser advises them to tell these little fibs.

Problem is these little fibs are fraud and fraud is very serious.

Doesn;t come to light in a rising market, but when the bank wants to get the property for foreclosure, they examine all the ways you violated the agreement.

My guess is that when interest rates rise again, shit will hit proverbial.

How does it work in the US? Is the mortgage adviser liable in any way?

[LexusLover]

Originally Posted by essence

OK, I agree, everybody agreeing is so boring, much better to have a good discussion....

How does it work in the US? Is the mortgage adviser liable in any way?

Huck was negligent, at least, in his factual representations....apparently.

I am not sure who you mean by the "mortgage adviser" ... but

... in a lot of the offending loan transactions there was a "mortgage broker" who found lending for the unqualified buyer, and the "broker" was able to "package" the borrower in a favorable image to meet the "underwriting" standards of the lender, which would ultimately package up the loans to sell to the investers. The "broker" got a fee for getting the loan approved when the deal closed. Many of the "closers" were nothing more than notaries, who often went to the borrowers home or office to have the papers signed in the package to submit to the title company that was issuing the title policy.

Subsequently, regulations required that the "closer" be associated with either a title company or an attorney's office for the closing to give the appearance of neutrality....and in my opinion to shift some, if not all, of the liability issues to the title company or attorney.

The title companies (and closers) "stuffed" the paper work with plenty of waivers, disclaimers, disclosures, and/or releases to cover their butts on the deals in an attempt to insulate them from responsibility and liability. The problem is: fraud is fraud, and it taints the whole deal.

The bottom line, imo, is that since the crash of the early to mid 1980's in the housing market the "dream" of one's residence being a good investment for the future is more of a nightmare.....and for many the nightmare hasn't even started, since projections are that there will be 30 to 50% more foreclosures this year than last, which continues to drive down the market, and these "loan reduction" short-term fixes do nothing more than delay the inevitable ... reducing one's mortgage payment to 50% for six months with a balloon at the end of six months with six months of 50% accummulated. ... if someone can't pay $1,000 a month how they gonna pay $4,000 in one month after six months?

Finally, "liability" means nothing, if the person liable has nothing.

For instance, Huck may have slandered, but what is his guitar worth?

[lizardking]

I looked at this at all this shit at 5:00am when I stumbled in, but I didn't have the . . . uh, fortitude, I think . . . to respond. I am now recovered.

LexLove, I believe you over-simplify when you state that the "lender" packages up loans and sells them to investors. That is a complicated process, and that is where the real problems lie in the "mortgage crisis". Your list of entities that "make money" from a mortgage is woefully incomplete because it does not include this process. You’re only listing out the small-time players. You might as well complain that the janitor that cleans the office where the closing takes place is making money off the mortgage.

First of all, the originator of the loan makes money on fees and it makes money when it sells the mortgage loan upstream. In my observation, a critical gap in the law is that the originator call divorce itself from any exposure to the borrower's default, thus eliminating any real financial incentive to properly underwrite the credit. Originators have incentive to generate as much paper as possible, so the conflict of interest is obvious. Period. The unscrupulous (NO!) will lie, cheat, and steal to get a signature on a mortgage, and Bebe’s account is anecdotal evidence of that. It’s pretty easy to convince an unsophisticated person to take out a mortgage loan they cannot afford to buy a house they cannot afford. The assumption that people know what they cannot afford has some merit, but it’s not always so. Predatory mortgage lending is unquestionably a factor contributing to the mortgage crisis. This is ass-kicker no. 1 in the securitization process, and this initial sale of the loan is the first step towards mortgage securitization. ("Securitization" is a broad concept that encompasses the conversion of debt into capital markets' instruments that can be traded on Wall Street.)

For several years, there was a bottomless demand for debt in the capital markets. Mortgage loans, sub-prime auto loans, credit card debt, etc. were all subject to a securitization frenzy. If you look to where the money is made in securitization transactions (generically referred to as "collateralized debt obligations" or "CDOs"), you'll find the root of the problem . . . and you'll find conduct that should be criminal or at least civilly actionable.

Often there is a second, third, and fourth seller of the mortgage loan, and these entities make money as well. In addition, the investment bankers and lawyers that structure the packaging and sale of mortgage loans make fees (particularly the investment bankers). Finally, a holder of a pool of mortgage loan will complete a securitization. This involves conveying the loans to a trust that then issues bond-like certificates that are traded on Wall Street. The certificates are usually divided up into three groups or "tranches" that have varying degrees of priority in the loan proceeds and correspondingly varying rates of interest. The top-level tranche (or "A-piece") has rights in first monies collected on the loans (including proceeds generated in the foreclosure and sale of collateral), but the interest rate is modest. These are relatively low-risk. The C-piece is a high-risk, high-interest proposition. As you can imagine, a great deal of investment banking and legal fees result from a securitization. Additionally, a placement agent must be retained - and paid - to aid in the sale of the securities. This is typically a brokerage, but since all of the investment banks have brokerage units (and vice versa), the roles are sometimes confused. Also, the trust must contract with a loan service that collects the payments and forecloses when necessary. All for – you guessed it – a fee.

The no. 2 ass-kicker in a typical securitization is the role of the rating agent (S&P, Fitch, or Moody's). They rate the certificates. The higher the rating, the lower the interest rate that must be paid on the certificate. More importantly, the rating is critical because an investment-grade rating means that the certificates can be purchased by institutional investors, like pension funds (more on this later). Incredibly, the rating agencies are paid a fee by parties involved in the securitization. Again, the conflict of interest is obvious. This is something like paying a critic to review my restaurant. Shitty ratings don't engender love or repeat business. This is another critical gap in the law. Ratings agents have no liability to anyone, and that means they have no accountability. Open up the courts for private suits against the rating agents and this problem goes away.

Ass-kicker no. 3 is also linked to the rating agents. The underpinning of an investment grade rating for a certificate backed by loans that EVERYBODY knows are suspect is fact that the performance of the loans secured by some type of credit default insurance known as a “credit default swap” or “CDS”. In this instrument, the underwriter of the basic CDO (usually an insurance company of some type) essentially wagers that the loans will perform at some level. At some point, the underwriters of CDS’s had the epiphany that they could take either side of the loan – pay or default – and sell a corresponding instrument. Its like discovering that instead of betting on the Texans and simply relying on my handicapping acumen to reduce the risk, I can become a bookie and take bets on both the Texans and their opponent and be guaranteed to earn the vig. The only caveat is that I need to balance my book. One can – or could – also find a CDS covering the certificates themselves. If you can envision what that means, it would be something like a casino taking a bet on the success (or lack thereof) of a gambler playing in the casino. In other words, you’re not betting on a roll of the dice, you’re betting on the long-term prospects of guy rolling the dice. It’s fucking crazy.

So . . . when the homebuyers default, what happens? The trust experiences a loss, and that impacts payments to the certificate holders, who then look to the party obligated under the CDS. As an example, Goldman Sachs was one of the biggest players in mortgage-backed securities, handling the banking chores on billions in transactions. It also held certain of these securities for its own account, but it hedged its position through CDSs, mostly issued by AIG. In other words, GS bet against the loans, while at the same time pedaling the certificates to its clients, including huge volumes of these shitty investments to pension funds, public and private. When the loans began to default in massive numbers, GS made claims under its AIG CDSs, and far in excess of of AIG’s ability to pay. Solution: bailout. The Feds bailed out AIG, which turned around a paid off GS. The only “crisis” averted was the apparently unbearable result of GS having a lean year or two. Luckily, GS was able to pay record bonuses. Its pension fund clients, however, haven’t fared so well. Many lost 50% or more of their value. Now we hear a great hew and cry that pension obligations are a millstone around the necks of state and local governments, so let’s strip the public retirees of their benefits. That’s bullshit! We could take the $130 billion in compensation paid on Wall Street and – for a start -use it to shore up these pension funds. This could be accomplished very easily if the courts – which have, by and large, been increasingly dominated by Republicans over the past twenty years and which hold at every possible turn to favor the interests of the wealthy over those of the rest of us – were open to private suits against the fuckers that engineered all of this bullshit to make piles of cash without contributing anything of any objective value to our society. And what about the dumbass that was sold a sub-prime ARM that he can no longer afford, resulting in he and his family being tossed out on the street? He’s been the victim – yes, a fucking victim – of intentional conduct that was reasonably calculate to cause him harm.

This is what I meant earlier when I said that investment banks finance inherently valueless transactions and only very rarely something as mundane a utilitarian as a factory. And, my friend LL, the word I used was “finance” and not “invest”. I know exactly what investment banking is, and I recognize the difference between banking and trading for one’s own account (which most of the investment banks do, often through an affiliate so as to maintain the illusion of the “Chinese wall” that ostensibly separates banking, retail brokerage (including research), and trading functions. Investment bankers and insurance companies are bookies taking a rake off of the giant poker game of American capitalism. Fuck ‘em all!

If you’re working for a living, you’re financial cannon fodder. Go have a few drinks and lap dances that you can’t afford and put it on plastic, you’ll feel better and you’ll be doing something positive for the economy.

[LexusLover]

Originally Posted by lizardking

LexLove, I believe you over-simplify when you state that the "lender" packages up loans and sells them to investors.

After you define "lender" ....

.. I've never heard a "lender" (meaning a mortgage company) out showing houses, telling buyers what a good investment owning a home is, and "marking up" the values of the homes to increase commissions and sales prices with closing costs .....

.. it's not an "over simplification" to examine the mortgage packages that are sold and realize that when loans get discounted for the sale that the "profits" based on the risks is marginal, and that many loans are sold "with recourse" because the buyers were not involved in the approval process and appraisal decisions. That is why the FDIC can follow the money and doesn't have to have "paper" to support the claims against ALL those who put the deal together ... and if the janitor sat "at the table" he gets sued also.

The "investor" who buys the packages did not make the decision to loan the money and did not entice the borrower to get the loan for a too much house on too little income. The "lender" may have a buyer in mind when reviewing loan files to assure that the paper work reflects the potential buyers' (investors') "underwriting" standards, but it is those who generate the loan paper with the borrower that "allow" the underqualified borrower to sign.

It takes 2 minutes for a "lender" to know if someone meets certain loan criteria and creditworthiness... based on the paper that sits in front of them. ... and that is the same paper shown to the investor. The paper was generated by those I mentioned who sit face to face with the unqualified borrower.

And they all know it.

It's not an "over simplication" when roughly 15 to 20 % of the contract purchase price goes to pay those at the closing.

[lizardking]

LL,

You're describing the mortgage business 1980's style, for the most part.

[LexusLover]

Originally Posted by lizardking

LL,You're describing the mortgage business 1980's style, for the most part.

Yes, that too, somewhat different twist, but the same result for owners. Lots of speculative "flipping" and the last guy holding the bag went down.

Can we agree that you want to deter by taking away the profits on the top end, and I want to deter by stopping it from happening in the first place.

"Nip it in the bud"?