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Have you ever wondered why there aren’t more people in jail because of all this Mortgage Madness?

More delicious white collar perp walks? More lawyers suddenly employed?

Sure, there’s Madoff and that other guy in Texas who are both certainly going away for a long, long time. But they weren’t connected to the housing mess, really. Amazingly.

But there is a metric shitton of apparent perpetrators in this disgusting mess. From the realtors, to the brokers, to the CEOs. And they’re called-out every day in the press, and on Capital Hill for their “wrong doing”.

So why haven’t there been more headline-inducing criminal charges for those awful people who so obviously “preyed” on our Nation’s poor and uneducated?

Are we lazy? Are there not enough judges? Have they paid somebody off?

After all, the national “ire” meter is through the roof, the highest it’s ever been. We want blood. If ever there was a time for publically stringing people up, it’s now.

So why isn’t it happening? Wasn’t all that stuff illegal?

Well, no. Sadly, and amazingly… it wasn’t illegal.

In fact, thanks to our super-awesome Government and its relentless pursuit of voters (and their property taxes), they actually made 99.9% of it bona-fide, free and clear, LEGAL.

From verifying income, to making sure the securities were rated accurately, all of it was A-OK.

And it was  made A-OK on purpose.

Ala the various iterations of the Community Reinvestment Act, and subsequent tweaks, even a cursory check for something like, say, income, would derail the whole, lucrative process. The Government would be deprived of their precious tax revenue, and the politicians would be deprived of appreciative voters.

And millions of Americans would be cheated out of their “American Dream”.

A quick word about the Community Reinvestment Act, without going tootoo deep into it (wiki, for that). Nobody is arguing the INTENTIONS of the CRA, which were to help people get homes who normally wouldn’t be able to get homes. A laudable aim, for sure, because after all, who wouldn’t want some poor, but well-meaning and hard working family to have the safety, security, and stability of a home of their own? Their very own “American Dream”?

(BTW, the “American Dream” is not “home ownership”, it’s “opportunity”. But if you want your “opportunity” to result in a home with a white picket fence, then so be it. But the “American Dream” is not, and has never been, merely owning a home. That definition was an invention of our politicians, The National Association of Realtors, and the media.)

So, only a certifiable asshole (or a mean old Republican) would deny a good-hearted, but poor soul, their “right” to own a home, right? Well, the problem with that, and the CRA is, instead of addressing the root of the problem –why these people couldn’t afford a home in the first place, or why their credit was bad, etc– the Government decided to simply force banks to loan them the money.

Those big, bad banks.

Again, perhaps an admirable tact, because at one point in our history some banks would “red line” whole communities, unfairly disallowing normally qualified people from access to credit based on their race, age, sex, or proximity to deadbeats. Never mind that various laws have outlawed that sort of thing for many, many decades. And the Fair Housing Act of 1968 made it all illegal yet again. But of course, despite the fact that redlining was already illegal five-times-over, the Carter Administration, through the CRA, decided that it was the banks’ fault, and only the banks’ fault, that more people weren’t buying homes. And therefore the banks’ duty to rectify the situation directly, by forcing banks to jettison their own, time-honored, self-imposed “regulations” for credit worthiness.

That’s right. The CRA outright forced the banks to loan money (for a home) to people who they would never have normally lent to. Not because of race, sex or location, mind you, but because of bad credit or lack of income.

(Leave it to Government to use a jackhammer for a job that really required a little sandpaper.)

At first the CRA only insisted that banks dedicate a small percentage of their total loan portfolio to “bad” home loans (because that’s what they were, “bad”, in a strict financial sense). And the banks quickly figured out how to make it work: by passing along the cost of the added risk to their customers.

The banks’ PR people saw an opportunity too, so we started seeing ads and press releases proclaiming “Last year we proudly made __% of home loans to underpriveledged families… we’re looking out for you”, etc. So it’s not like they used their bully pulpit to bitch about it.

But then under Clinton, though, the quota of “bad loans” went up. Way up, to almost 50%. Thanks Andrew Cuomo.

And, well, the banks hit the roof. 5% forced-bad loans they could deal with. They could sweep it under the carpet, and pass along or hide the cost. But 15, 21, 34, and then almost 50% was just too much. It was becoming catastrophic to their business. And so they did what any red-blooded American big business would do: they lobbied the shit out of congress.

So the Clinton Administration agreed to re-jigger Freddie and Fannie to “back” these increasing numbers of bad loans, which were rechristened “sub prime” and hailed as a new “groundbreaking” loan type because they “helped” so many people.

Again, subprime simply meant “loaning money to someone with bad credit”. 15 years ago that was considered a good thing.

Fast-forward to 1998, and the banks still weren’t happy. At all. F&F simply weren’t efficient enough to “eat” all these ever-increasing numbers of bad loans.

And numbers of bad loans were ever-increasing for more reasons than just ever-rising CRA quotas, of course. As stupid as the banks knew all of this was, the implicit “Government backing” that came with F&F spurred them, and their adjuncts, to make even more bad loans, above and beyond those insane quotas. After all, the Government (us) had their backs, right?

Well, even though, technically, F&F “had their backs” the banks were still nervous about having all those bad loans on their books (Enron hadn’t happened, and so mark-to-market wasn’t in effect yet). So in 1998 Clinton, along with a bipartisan congress, repealed Glass Stegall, allowing banks to securitize these home loans, good and bad, and “kick” them up to wall street.

That meant that these bad loans no longer had to sit on their books. In fact, they could easily sell them now,  especially after the bubble burst in 2000. Because securitized home loans, which represented a solid, underlying, physical asset (the house and it’s property), made sure these new securities were suddenly very sexy.

Then, as they tend to do, Wall Street started divvying them up, and bundling them into packages, and hocking them to anyone and everyone they could. Including poor, poor Iceland.

And then Greenspan refused to raise the interest rates, further fanning the flames. Raising prices.

Etc. Etc. Etc.

(PS, read this post if you want a slightly more detailed explanation of all this awesemeness)

But the overarching point here is this:


That’s why our thirst for blood is going unquenched.

And why was it all legal?

Stay with me here… and follow the money….

Because, under the auspices of helping poor people, the Government MADE it all legal.

That’s why we’re not seeing Dog the Bounty Hunter dragging those asshole mortgage brokers out from under their beds by their hair. That’s why we’re not following some Wall Streeter as he skips from country-to-country trying to evade extradition. That’s why were not seeing anyone busted for anything.

It was LEGAL.

It’s distasteful. It’s greedy. And it might actually end up ruining the World.

But again, IT WAS ALL LEGAL.

The Government forced the banks to abandon their own, century’s old self-imposed “regulations” in order to “fix” a societal problem (regulation). And they repealed their own laws that stood in the way, too (deregulation). They offered up Freddie and Fannie to backstop this idiocy. And then they act surprised that some of the worst elements of our society looked at this ludicrous, artificial market and said “I’ll bite!”

And after a while even the good, moral players had to play along. Because they were losing business.

Government tees it up, and then acts surprised when the private sector knocks it out of the park.


And every discussion at every Denny’s, right now, surely includes the words “they should be put in jail!”

And they’re not wrong.

Those slimy mortgage pushers who signed as many people up as they could, and then danced off with their millions of dollars in “fees”? And those unctuous iBankers pushing these bundled securities, they knew were full of shit? And don’t even get me started on the credit ratings agencies. I mean, how on earth were these overly-complicated packets of over-priced, and obviously bad loans given AAA ratings?


It was LEGAL!

But now we have to ask ourselves… WHY was it all legal.

As a country, we MUST do that. We HAVE to do that. Because that’s the only way we’ll learn from this.

And let’s be very wary of the people who are saying “Common guys! The damage is done! It’s water under the bridge! Let’s not point fingers of blame! Let’s move forward!”… we need to because those are the people who caused this mess.

We absolutely should go back in time, dig around, point fingers, assign blame, and be vigilant about what exactly happened. And why.

It’s the only way to make absolutely sure it doesn’t happen again. Ever.

It’s our duty to do that. We owe it to ourselves. We owe it to our children.

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Heal thyself

Right now fingers are being pointed, wagged, and extended in all directions.
Angry fingers. Righteous fingers.

Who knew what, when?!
Who said something?!
Who actually tried to do something?!

Well, in all directions except one.


Turns out the very people who are currently trying to “fix” this financial clusterfuck… are the very ones that caused this financial clusterfuck.

And can we really expect the Government and their benefactors to investigate themselves?

Sure, they’ll pretend to. But it’s all empty gesture. Sans substance. Theatre.

But the truth is out there. And we can thank our meth addict of a 24-7 news cycle for that.

So where are the clips?
Where are the told-ya-so soundbytes?
Where’s the proof?

Don’t hold your breath.

The emperor has no clothes, a small dick and a bad herpes outbreak.

The Government teed it up, and Wall Street knocked it out of the park.

But let’s not waste time by pointing fingers.
It doesn’t matter how this happened, it only matters what we do next.
Let’s just agree that everyone screwed up, and move forward.

It would be almost funny if it weren’t the exact polar opposite of funny.

Government changed the rules, and then acts surprised as the market finds ways to stay in business, and even profit.

But, really. Can a white knight in shining armor really save the princess if he was the one kidnapped her, raped her, stole her money, and left her for dead?

He’ll sure try.

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Was it greed? Was it capitalism? Was it super-greedy uber-capitalism?

Well, one thing’s for sure, we wouldn’t find ourselves having to bail out AIG, Freddie & Fannie, Bear Stearns, and the millions of flippers and defaulters if the real estate bubble hadn’t burst.

And, of course, the real estate bubble wouldn’t have burst if all the foreclosures and mortgage defaults hadn’t happened.

And all those people wouldn’t have defaulted and gotten foreclosed on if they hadn’t tried to buy too much house to begin with, via those vile subprime and other “predatory” (even “racist”) loans.

Which wouldn’t have happened if we hadn’t all thought real estate was a “good investment” and “always goes up”, and is “The American Dream” (which it’s not, “opportunity” is).

And, it’s important to note, Real Estate wouldn’t have “always gone up” (for 5 meager years) if the tech bubble hadn’t burst and Sir Alan Greenspan hadn’t depressed interest rates for way, way, way too long.

And those securitized rotten mortgages wouldn’t have been peddled so aggressively if Sir Alan Greenspan hadn’t depressed the interest rates for way, way, way too long, either.


Alan Greenspan wouldn’t have depressed interest rates for so damn long if the country wasn’t heading into recession after the demise of the tech bubble.

Of course the tech bubble burst because people finally realized that tech stocks don’t “always go up”.

(end interlude)

All those bad, securitized mortgages wouldn’t have (couldn’t have) been securitized if the banks, along with Freddie & Fannie, hadn’t lobbied for Republican Senators Phil Graham and James Leach to repeal the Glass-Steagall Act (a post-Great Depression law that banned banks and brokerage houses from intermingling their finances) which was passed 90-8-1, and signed by Bill Clinton.

The banks, along with Freddie & Fannie, wouldn’t have lobbied for Glass-Steagall to be repealed if the banks, along Freddie & Fannie, hadn’t been suddenly handling an ever-increasing amount of really stupid, bad mortgages.

Freddie & Fannie wouldn’t have been able to “revamp” themselves and “back” all those idiotic loans if Clinton hadn’t installed his buddy Jim Johnson and former budget director Franklin Raines (both of whom are currently high-level Obama campaign principals).

Clinton wouldn’t have installed his cronies to head up F&F (and change their rules) if the banks hadn’t cried bloody murder (lobbied) about how dangerous, and risky all these mortgages, now sitting heavily on their books, were.

And, finally, the banks would never have partaken in these super-risky mortgages in the first place had the office of Housing and Urban Development, at Clinton’s direction, not drastically increased the home ownership quotas for “minorities” and other, “less fortunate” citizens.

And Clinton would have never demanded that “minorities” and other, “less fortunate” citizens, had it not sounded so darn good. In theory. Politically.

And, well, that’s it. That is exactly what happened.

All of this with the obvious and important fact that throughout all of this the Government willfully failed to enforce laws already on the books, like you can’t loan money to someone who can’t prove their income (bank fraud) and you can’t give junk-rate securities a AAA rating when you know full well they’re junk (securities fraud).


By the way, it’s not too late to enforce these laws, and even collect money from the monumental assholes that perpetuated this mess. Both in Government and in the private sector. From Congressmen, to Fed Chairmen and Presidents. From wannabe BoilerRoom Mortgage Brokers to Wall Street CEOs. These jerks owe us money, and jail time.

(end interlude)

You know what they say about good intentions?

Whoever they are, they’re right.

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Okay. Here’s the plan.

Everyone under 40 years-old… STOP SAVING FOR RETIREMENT. NOW.

That’s right.

Stop socking money away in your 401k. Stop buying stocks, bonds, CDs, whatever. Fire your broker and tell your financial advisor to take a hike.

Get all that money back… Get all your credit cards together…

And spend it. Spend it all!

Go on vacation.
Buy a new car.
Have a huge party with all your friends.
Try skydiving.
Just take that money you were saving for retirement, and spend it.

Have a blast!

…Yeah, I know it sounds crazy. And probably goes against some of our “gut” instincts about what’s right, and what’s not.

But you’ve got to trust me on this one.

Because if there’s one thing we’ve learned about personal, fiscal responsibility in the last few months is…YOU DON’T NEED IT!

Isn’t that awesome!

There is no reason whatsoever to keep a budget, balance your checkbook, or even pay your bills. That stuff is way overrated.

Can you smell the freedom!?

…Look, I know this sounds crazy, but we have NOTHING TO WORRY ABOUT. Because the Government’s got our backs. And the Government is, like, HUGE.

So no matter how stupid, or irresponsible we are with our money, and our lives (let the suckaz call it what they want), we will not starve. In fact, we’ll most definitely come out ahead. And rightfully so. I mean, what else is our Government there for? We PAY for it, for crying out loud!

And here’s the beautiful part: the worse we make it, the BETTER it’s going to be! Because if only a few of us throw caution into the wind and live life to it’s fullest NOW, then the chances of Uncle Sam coming to our rescue aren’t so good.

But if ALL of us do it… TENS of MILLIONS of us do it… it can’t fail!

Think about it. 35-or-so years from, there we are, millions of us, all of a sudden either retired or (gasp) layed-off from our jobs. With no where to go. And more importantly, no money to PARTICIPATE IN THE ECONOMY with!

How SAD is that!? And that’s when the news stories start pouring in.

I mean, what plucky up-and-comer at your local news station WOULDN’T do a story on the BIGGEST, SADDEST CATASTROPHE EVER?!? (We won’t call it a “crisis”, that’s so 2008).

Think of the headlines! Think of the empathy!

Then all we have to do is sit back, and let the bailout come to us.

“But wait” you say, “Isn’t that just OUR tax dollars being used to bail us out?!”

Aha. And that’s the real beauty here. It’s not OUR tax dollars, it’s our CHILDREN’S tax dollars.  Let THEM figure it out.

Hey, the Government always finds a way, right?

So, my fellow Americans, who’s with me!?!?

Here’s to living in the present. And living life to it’s fullest.

Here’s to 2042 !!!



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In Defense Of Common Sense

Dear Senators and Representatives,

This is an open letter regarding the “Housing Bill” you are currently considering in the Senate. And I have a message from your constituents:


Sure, there are a lot of people who are “upside down” in their mortgages, dealing with rising monthly payments, facing foreclosure, and some are even walking away from their homes…

But there are a lot more of us who aren’t.

It may surprise you, being politicians and all, but the majority of us out here actually passed second-grade math class.

And we know that buying a house is a big deal. A very big deal.

We know for instance that borrowing multiple hundreds of thousands of dollars requires more than a passing glance at a multiple-page contract. And, crazy as it sounds, might even require a lawyer.

We know that if a mortgage payment surpasses, say, the 50% mark of your monthly take-home income, then it *might* not be such a good idea.

A heck of a lot of us out here heard the term “adjustable rate mortgage” and thought, maybe, just maybe, that it might actually “adjust” at some point down the road.

Our supernatural spidey sense also told us that people with 5 maxed-out credit cards, 2 past bankruptcies, and make 40K a year *probably* shouldn’t be buying a 500K home. In fact, they probably shouldn’t be buying a home at all.

Some of us were actually alive, and paying attention when the dreaded “Tech Bubble” burst, way, way back in 2001.

Some of us lost money.

So, naturally, some of us had a sneaking suspicion, too, that “No Money Down!” might just not be the brightest of ideas when it comes to spending hundreds of thousands of dollars. Especially hundreds of thousands of dollars that aren’t yours.

And we raised an eyebrow when “Flip This House!”, the reality show, debuted across the country in 2005.

We raised another one when “Flip That House!” appeared on a competing network in 2005.

However, we were fresh out of eyebrows by the time “Flipping Out!” debuted, on yet another network, in 2007.

You get the point.

You see, a whole bunch of us saw this whole thing coming from a mile away.

And we did something crazy.

We DIDN’T jump on yet another get-rich-quick bandwagon.
We DIDN’T over-extend ourselves and buy more house than we could afford.
We DIDN’T sign multiple-page contracts without reading them.

Most important of all, we DIDN’T take on unnecessary risk and expect the Government, via our fellow citizen’s hard-earned tax dollars, to bail us out.

We continued to rent.

We did what some would call “the right thing”. Even though that was merely being fiscally responsible. And just barely, at that.

Call it what you will, we did it.

And you know what? We vote

Look. Don’t bail out these selfish idiots. Especially the banks.

And unless someone was absolutely, and provably defrauded, you must resist the urge to come swooping in like some super hero savior. Simply let the market do what it does best: work.

America can’t afford foreclosure relief.

No matter how many sob stories make it into our glorious 24-hour news cycle. Resist the urge with every pandering, political bone in your body.

Sure, it may temporarily “depress” housing prices, including some of those who weren’t directly involved in this whole mess. But remember, when we see a 30% drop in price of a house that was twice as expensive as it should be, is still 40% too expensive.

The truth is, despite all the whining, the market is still over-priced. Everywhere.

But perhaps the real reason for your concern is that you’re seeing your property tax coffers shrink across the country? Well, much like the infamous home owners and their home equity lines of credit, buying boats and plasma TVs with phantom equity, perhaps you politicians shouldn’t’ve have budgeted on a bubble either. Eh?

So please, if you can, suck your crocodile tears back into your reptilian tear ducts, and stop this bill. Stop this insanity.


Because if you DO bail these people out, even a little teeny, tiny bit, you will have not only done the wrong thing. You will have made doing the right thing no longer necessary.


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Well Bear Stearns, you did it.

Sure, there were a lot of greedy bastards in all of this, both on the bank side and the consumer side. But you, sirs, somehow managed to be such monumentally large douches, you’re actually taking the rest of the World down with you.

“Too Big To Fail” is the term that’s been bandied about.

And of this, I’m fairly sure you were well aware. I mean, why else would you ignore just about every news report for the last 3 years and somehow decide that actually *buying* these rotten loans was somehow actually a *good* idea?

Okay, you’re right. You were not alone. But you weren’t satisfied with merely being one of the pack. No sir ree.

Not only did you hold you nose and drink the tainted subprime tequila shot-for-shot with those other greedy douchebag banks, you chased it with a 4-foot bong of northern lights, a whippet, and then went streaking.

And before you say that’s the worst analogy you’ve ever read, let me clarify. …A little back story.

When I was in college there “the rich kids” and the “rest of us”. The rich kids were lucky enough, to have their parents pay for everything: school, food, housing, and even a little spending money for booze. Whereas the “rest of us” had to pay for everything ourselves, either through school loans, or if we were smart, actual jobs.

Well, somewhere between freshman and sophmore years, there was this rash of rich kids who went nuts with their parents’ money. They bought booze, drugs, music, clothes, and everything else you can think of like it was going out of style. Drunk with their first taste of freedom, and a little gratis spending money, they let loose.

And there was always that one kid who took even that way to far. And I knew one of those kids.

On top of the booze, drugs, clothes, music and what have you, this kid signed up for a bank account, and a credit card, and in a desperate attempt to gain some ephemeral small time fame, went and spent as much money as he possibly could buying booze, drugs, clothes and anything else he could think of, for anybody and everybody.

He threw parties. He took other kids on shopping sprees. And for about 3 full months, nobody on campus had to buy any beer or weed because he had it taken care of.

This lasted for several months, and by various accounts he owed well into the tens of thousands of dollars when it was all said and done. And when I asked him why the hell he did that… why, when his other friends were topping out at, say, $1,500… why he had to go so overboard?

It was simple, he explained. You see, those other kids ended up having to pay for their debt themselves, because it was relatively minor. He, on the other hand, was more conniving.

Or was it smart?

Since he had made his situation so bad, so untenable, he was in a unique position. And his parents were in an unenviable one. Since the level of damage was so great, their unfortunate choice was simple: either “teach their son a lesson”, and insist he pay for his monetary misdeeds, which would surely mean dropping out of school, a mountain of mind numbing legal problems, possible criminal charges, and assured bankruptcy? Or, in lieu of “ruining his life”… reluctantly bail him out, but with a stern talking to?

You know what happened.

And who can blame these parents for bailing out their son? As much as they probably wanted to see him suffer because of his idiocy, they couldn’t let his entire future get thrown out the window with the proverbial bath water. So they bit the bullet and did what they had to do.

This kid is Bear Stearns. And the Government is, once again, the parents.

And you thought that was a bad analogy.

So bravo Bear Stearns. Your plan worked perfectly. And only time will tell if you  threw the World’s entire future out the window with your dirty bathwater.

Okay that was a bad one.


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