Discussion Topic |
|
This thread has been locked |
Matt
Trad climber
primordial soup
|
|
|
Feb 25, 2009 - 06:50pm PT
|
i'm saying they are highly suspect, given the source.
similarly, i could not have attested that barack obama was in fact a US citizen, and had been born in the US as required by law for anyone to become POTUS, but given where those claims were made, i was able to discount them and be comfortable with it.
you, sir, have not offered any claims that are worth refuting, investigating, or even commenting upon. you have parrotted what are blatantly apparent to be ideologically driven "talking point" type responses to the observable fact that our economy melted down on the heels of 8 years under george bush, the first 6 of those with the control of both houses of congress.
that so-called "conservatives" want to push the blame for that meltdown away from the policies that they championed for decades and finally implemented under bush II should not surprise anyone. can we not agree that we should AT LEAST insist that they attempt to make a fact based, statistically supported argument, rather than one of finger-pointing at move-on, Acorn, michael more, public education, high taxes, gun control, and gay marriage?
(and please, shouting about ACORN at the top of your lungs is meant for audiences inside the vault! i.e., when you hear that rhetoric, what it should be telling you is that these guys are not substantively supporting their argument in any way, and what they are relying on is certain key words that will resonate with the "base" of the republican party, defined as those who will believe anything their slow-talkin, hate-mongerin, quietly (but not that quietly) racist media icons say)
i'm over this
you guys are seriously just not that smart- not that i am either, but this back and forth with your unfiltered political commentary as the foundation of serious argument is just pointless. go read a real book!
here's one:
http://www.amazon.com/Perfectly-Legal-Campaign-Benefit-Everybody/dp/1591840198
|
|
bluering
Trad climber
Santa Clara, Ca.
|
|
|
Feb 25, 2009 - 06:55pm PT
|
I don't see how you can dispute that lending institutions were pressured to give out loans to people with poor credit ratings and low down payments. They were accused of 'redlining' and discriminating against certain groups and, as a result, were pressured to give out crappy loans.
|
|
John Moosie
climber
Beautiful California
|
|
|
Feb 25, 2009 - 07:00pm PT
|
"I don't see how you can dispute that lending institutions were pressured to give out loans to people with poor credit ratings and low down payments"
It wouldn't have been possible to pressure them if the laws hadn't been changed to also give whitey that same opportunity. You can't pressure someone based on race bias if the other races aren't already getting it.
The real problem was the loosening of rules. Rules that were created to protect us from the mess we are in now. Without the looser rules, there would have been no way for Acorn to pressure anyone.
|
|
dirtbag
climber
|
|
|
Feb 25, 2009 - 07:01pm PT
|
"(and please, shouting about ACORN at the top of your lungs is meant for audiences inside the vault! i.e., when you hear that rhetoric, what it should be telling you is that these guys are not substantively supporting their argument in any way, and what they are relying on is certain key words that will resonate with the "base" of the republican party, defined as those who will believe anything their slow-talkin, hate-mongerin, quietly (but not that quietly) racist media icons say) "
Yep, dog-whistle politics: Southern strategy/states rights /welfare queens/black presidents drawn as chimps. They're all racist code-wording designed to get a conservative segment riled up. It's worked for years.
And pro-secession anti-ACORN economists have ears that are well-tuned to that kind of stuff.
Ah, if only Strom Thurmond had won in '48, we wouldn't have the kind of messes we have today.
|
|
TradIsGood
Chalkless climber
the Gunks end of the country
|
|
|
Feb 25, 2009 - 07:04pm PT
|
If you really want to show that you understand the mortgage market, here is a thread where you could contribute by constructing your own perfect world solution:
http://www.supertopo.com/climbing/thread.html?topic_id=794946
I don't expect it will get many contributions, since criticism is easier and more fun than actually solving a problem.
|
|
dirtbag
climber
|
|
|
Feb 25, 2009 - 07:07pm PT
|
Sure. 60 years ago. The Dems were the racist party, and largely conservative for much of its history. But racism, a funamentally socially conservative impulse, has a different home now. You don't find many conservative Dems anymore.
|
|
pip the dog
Mountain climber
planet dogboy
|
|
|
Feb 26, 2009 - 02:56am PT
|
[I’d still like to see this thread focus on stuff that might actually be of use to our mighty brother Bachar. Really.]
~~~
That said, to answer an earlier question “how did this happen”
[Massive Post Warning – think PgDn Key]
I spent a couple years as an independent contractor writing stock and bond selection models for a number of the huge investment firms now in the headlines. My work was trivial and used at the far margins of the game. The pay was (relative to my talent) spectacular, so I did it - then quick headed off for many months in the bronze age at altitude. Eventually i came crawling back with my last jar of peanut butter for my next cash fix.
This is my piddly background – but through it I did end up as an accidental fly on the wall to witness the beginning of the current meltdown. (Me, I never once did anything remotely real estate or mortgage related – so no need to come after me with a chainsaw... pahlease)
~~~
So here, in 1400 words or less, is what I witnessed first hand:
Through most of US history, one got a mortgage through their local bank or S&L. As they were using their own money (their depositors’ cash) and were local, they looked quite hard to see if an applicant was in a good position to actually pay off the mortgage. The mortgage brokers all worked for the banks/S&L’s – so if they got it wrong more than a couple times, they were quick unemployed.
In the very late ‘90’s and into the early 00’s, the biggest institutional brokers (who were forever looking for the next cash cow) came up with idea of bundling hundreds of retail (home) mortgages into a single mighty ‘unit’ of $10mil or $100mil (or more) each -- that they could then sell to their largest investors (like massive pension funds all over the world).
So they set their best quaints (mostly recently academic statisticians, physicists, and math geeks) to coming up with the math for such a ‘unit’ of such size and built from so many mortgages (and soon just pieces of mortgages) that they were “statistically” almost risk free. I have two friends, both high end water cooled brain phycisits that they lured out of academia and the labs with salaries 5 or 8 or more times what they were used to.
So this pool of massive IQ’s (with little actual experience in any reality, let alone home mortgages) come up with some imponderable formulas that suggest that a big enough unit made up of enough teeny mortgage pieces where, effectively, risk free. Such that even if a statistically improbable bunch of them went belly up, the mighty unit would sail on and make big profits.
This was the moment the current disaster was born.
~~~
At this point the huge institutional brokerages needed wads and wads of mortgages to fill these ‘units’ and started buying them hand over fist from banks and other mortgage outfits. They were insatiable, as they knew they would make mega wads selling the units to their largest clients.
And they offered the banks, S&L’s, and other mortgage lenders a very sweet bit of cash to sell them the mortgages on their books. So, human nature being what it is, they all sold tons of them to the big institutional brokerages. And these huge brokerages used their fancy software to assemble mighty ‘units’ and found them easy to sell to most everyone around the globe.
For they were based on US home mortgages – which within the lifespan of most buying them was considered all but bombproof. That and the huge institutional brokerages assured them that their might geeks had done the math and it was bombproof. And just having the name of a mighty institutional brokerage behind it all meant a lot to most.
~~~
The lenders who once actually held the local mortgages (and regularly drove by the local properties to ‘kick the tires’) sold off most of their mortgage portfolios and made a sweet profit on every one.
~~~
OK, now enter the “independent mortgage brokers” I know a few of these people too, but don’t consider them friends. Unlike the traditional mortgage broker BITD – those who worked for the lenders who had their own money at stake – this new breed was accountable to no one.
Even those ‘newbies’ who were dummies would make a half a point (0.5%) on any mortgage they wrote. The more informed among them made notably more. Think about this – that is $1,000 for the hour it takes to do a “search and replace” on some boilerplate contract for a $200K mortgage -- then get someone, anyone, to sign it. Some who signed understood all the details and ramifications. Others did not -- though not all in this latter group were stupid or greedy weasels. The contract for an ARM is a very complex document, seemingly designed to confuse.
And who among us didn't dream of owning our own home -- even many years before we could really afford it?
These 'independent mortgage broker' twerps (very few of whom were licensed -- and I witnessed a bunch of them personally) were doing this a couple of times a day, every day, and for a couple of years in a row. In all, crazy big money. Some of them actually razz'd me and said ‘why be a such moron doing what you do -- do this and get crazy rich!” For whatever reason, I deferred…
~~~
Now think of this in terms of all of the above (I prattled on so for a reason). The Independent Mortgage Brokers (many ex-car salesmen, or the like) are signing on anyone with a pulse into a mortgage. Issues like whether it was appropriate to their income or even remotely do-able be damned. For with each signature then got many thousands. And they could, and did, do it many times a day, every day, and for a couple years.
You’d think that the actual bank/lender named on the mortgage might stop and read some of these mortgage apps and say “What? Are you insane?” But they didn’t. For unlike the old days, when it was actually their money at risk, in these days they quick sold the mortgage to one of those massive institutional brokerages – and for a sweet profit. And once sold off -- not their problem.
Back at the most mighty institutional brokerages, they didn’t care to read the app and kick the tires either. For they quick chopped up the incoming flood of mortgages and jigsawed them in pieces into one of their mighty – and mighty profitable – massive ‘units’. Then they quick sold those units to some massive pension fund or the like -- for what was for them too a mighty sweet profit.
___
And those at the end of this food chain, the massive hedge funds, pensions, foreign banks -- just bought this stuff up like candy. For, after all, famous massive institutional brokerage firm XXX assured them that they had done the math and found the result ‘bombproof’. And with this, their clients throughout the planet figured “Hell, these are US home mortgages, of course they are solid (none were old enough to remember like, 1932). And besides (and mostly), the mighty and famous global institutional brokerage XXX assured us it is bombproof! And at 250+ basis points over a US treasury bond of the same duration? hell, a no-brainer!
~~~
And so it went. For at leat 8 years. And all of the players on the food chain made huge money. And those who bought the units assumed they’d do as well. Hell, even the big banks and brokerages fell into their own trap.
And then somebody said (not the first, but finally someone loud enough -- “The king has no clothes!”) and within a week it all cratered, and continues to this day to collapse towards the core of the earth.
~~~
So who specifically among this tag-team of greedy turds is responsible for this mess? As Darwin tells us that it is the greedy and selfish who survive, I myself would say all of them. Though I do admit that I have a special dislike of the front line – those independent mortgage brokers. For they alone were in a place to know the realities of the specific souls they were damning to something truly ugly. Ah, but there is more than enough blame to go around.
Our species wear pants, or pant-suits, and smile and shake hands. And yet too many among us would rip your kidneys out if you fell down and couldn’t defend yourself – just to sell them in the organ market in Bangladesh.
~~~
If nothing else, I hope this ‘fly on the wall, up close and personal vision’ of what went down, perhaps leads those who might want to blame it all on people not as pale as most of us gringos to pause a moment and reconsider their conclusions. For this cabal could care less what color you were – as long as you could hold a pen and sign your name.
~~~
As for the best way out of it, who among us really knows. It is Terra Incognito. I hope for my own small selfish sake if not yours that those at the helm guess right. I do believe that the prior administration’s belief that unregulated capitalism will cure all is at best, poop. I’ve met and stood close to enough of the “masters of the universe” that I have absolutely no faith in the most of them. Years of being worshipped and having a limo forever at hand, and being slobbered over by most everyone they meet, well, its rots out even what might have once been an actually powerful and focused mind.
I think that a bit of regulation is essential. Not at the “Premier Kissoff’s” extreme. But entirely unregulated capitalism leads to what? My guess (and I suspect Darwin’s) is: complete anarchy.
But that is a political statement, and this dog refuses to do politics in a public place – as the results are forever as tedious as they are pointless.
~~~
I’d still like to see this thread focus more on stuff that might actually be of immediate use to our mighty brother Bachar.
fwiw...
^,,^
"The dullest end of the pencil is the top of your head." - Franz Kafka
|
|
jbar
Social climber
land of the lost
|
|
|
Feb 26, 2009 - 03:55am PT
|
Excellent way to sum things up Pip!
I myself was wondering what was going on when my FHA loan was bought by GMAC about 8 years ago. When I started looking for my mortgage lender I went wit FHA even though I was a vet because they were super easy to get qualified through and I had only had my civilian job for 6mos plus they were actually offering me money. I couldn't figure out how FNM could possibly afford to give every one of their lenders $3000 to cover closing costs but now I guess it's pretty evident. Also evidence that giving lenders money is not going to solve this problem. IMHO lenders weren't so much pressured into anything but rather assured they would not be accountable. As already stated they knew they would not be holding the loans for long but I also feel they knew they were protected. FNM is charted by Congress after all.
|
|
bachar
Gym climber
Mammoth Lakes, CA
|
|
|
Topic Author's Reply - Feb 26, 2009 - 11:49am PT
|
I've been hearing more of the so called "produce-the-note" tactic to prevent foreclosure. Apparently if the mortgage servicer can't find the "real note" on the mortgage, the homeowner is off the hook? owns the house?
Does anybody know anything about how it works?
|
|
Chris Roderick
climber
|
|
|
Feb 26, 2009 - 12:09pm PT
|
One of the articles posted in here said the "produce the note" strategy usually only works as a stalling technique and that a lot of judges may eventually accept an electronic copy, etc, etc..
Nice post Pip!
|
|
Dick_Lugar
Trad climber
Indiana (the other Mideast)
|
|
|
Feb 26, 2009 - 12:57pm PT
|
Wow, so it's not the "minorities" fault afterall for the financial collapse of the US, but actually it's all those academia nerds..mathematicians, physicists, and MBA'ers! I knew it! LOL!
Pip, that was an incredible summation of what "really" went down. That's probably one of the most, if not the most insightful pieces of information I've read here on ST in my modest 3yrs. of viewership. Thanks for taking the time to post up!
|
|
bluering
Trad climber
Santa Clara, Ca.
|
|
|
Feb 26, 2009 - 01:21pm PT
|
Pip, that was well put.
It amazes me, however, that so many refuse to put blame on people accepting these mortgages who clearly couldn't afford them.
I'm know real-estate or banking genius but I knew damn well I couldn't afford a Bay Area home 2 or 3 years ago. It requires some very simple math.
House cost - down payment x interest rate = monthly payment.
|
|
Nefarius
Big Wall climber
Fresno
|
|
|
Feb 26, 2009 - 02:13pm PT
|
I agree with a post up-thread - Can we get this back to the info the bachar was looking for? Seriously. I'm guilty too, no doubt. But let's get it back on track for the man. I think bachar saving his home, as well as anyone else who can benefit from the info here, is a bit more important than any of our opinions and drivel.
|
|
Double D
climber
|
|
|
Feb 26, 2009 - 02:28pm PT
|
John, as far as the "produce-the-note" tactic...
Most all of the industry went paperless a couple of years ago and in your mortgage paper work you most likely agreed to accept electronic scans or faxes to be legal and binding. In CA you will definitely find this mirrored in your CA Purchase agreement from about 2004 on (this is just from memory...I have it on file from older RE clients).
The only thing that I'm really seeing consistent results on is using RESPA violations that are found by combing your paper work and finding the violations. Then a lawyer files a suit that stalls any foreclosure action until the suit is settled. During that time the law firm re-negotiates the mortgage. Most legit companies do charge up front fees to look into this but will offer a full refund contingency if they don't think you have the applicable RESPA violations to go forward.
Good luck my friend!
|
|
ontheedgeandscaredtodeath
Trad climber
San Francisco, Ca
|
|
|
Feb 26, 2009 - 02:41pm PT
|
Bachar, the original note must be produced. People are having luck with this because mortgages were being sold all over the place. It's more of a delay tactic- I'd assume the note will eventually be found.
See California Civil Code Sections 2924 through Section 2924k for info on the foreclosure process.
|
|
pip the dog
Mountain climber
planet dogboy
|
|
|
Feb 26, 2009 - 09:28pm PT
|
fattrad,
> You missed one key and crucial ingredient in the mix...
> the rating agencies. Yes, those guys just put a AAA rubber
> stamp on everything
You’re quite right. For who pays the rating agencies? The client -- in this case the big institutional brokerages who put huge pressure on the rating agencies to sustain their oh so profitable ‘units’.
And there were of course others involved in this feeding frenzy. fwiw, I tried to stick with just the main vein of the food chain so as to keep my post under 30,000 words.
~~~
AIG is another notable pig at the feeding trough. For nearly a hundred years they had a solid and profitable firm focused on bread and butter insurance – auto and homeowner stuff. But when some of the mighty big name institutional brokerages begin to get a bit of the ‘heebies’ as to how low risk these units actually were, they went to AIG and said:
“Dudes, you could make a fortune insuring our mighty ‘units’ – for we’ve done all the nonlinear math and have demonstrated that they are in fact bombproof... But, then, some of our less informed clients might perhaps be reassured by some insurance behind the 'units'. So what do you think? You can make zillions insuring our 'units' – and unlike cars or houses, our ‘units’ will of course never crash or burn."
So the MBA’s at AIG of course jump all over this chance to join the feeding frenzy and make all manner of 'risk-free' free money. Soon AIG goes way outside its century old business plan and writes policies on over at least a trillion dollars worth of ‘units’ (likely more, it's just that we the general public are not allowed to know). And soon the cash comes pouring into AIG. Touchdown! And of of course, AIG saw no reason to set aside much capital to back up these ‘bombproof’ units.
There is a reason why Paulson and Bernanke dumped some of the first, and largest, wads of the TARP cash into AIG – and still more since. They realized that AIG’s ‘insurance’ on the failing units was the last small twig many of the ‘mighty’ institutional brokerages had to cling to when they finally realized they were way up poop creek without so much as a canoe.
And that if word of how under funded AIG was to cover even a fraction of this massive debt got out into the general press, it would be chaos.
It kinda pisses this taxpayer off that that this dynamic duo (Paulson and Bernanke) sold the idea of the TARP to the congress based on one specific game plan -- but once they had the first $350 billion in hand they suddenly changed their minds and did something very very different with the cash. But that enters the realm of politics, and I don’t want to go there, certainly not here.
Perhaps the biggest pisser in this whole circus, to me, is that no one but a select few know exactly what the actual numbers are at all the firms involved. How much toxic debt does Citi, or BofA – or any of their many peers hold? And just how toxic is any given 'unit'? Some, i suspect, are worth 70 cents on the dollar. Others are worth less then a dime on the dollar. But without actual facts and numbers, how can we left holding the bag begin to guess?
I think that once we the taxpayers (via the feds) dump many tens of billions of our money into a firm, we should get to see all of the details that the fed regulators have already seen.
To date, just a few select C-class suits, and a handful of fed regulators, actually know. But as for the rest of us, those who are being asked to pony up still more imponderable wads of cash (on our grandchildren's credit), we don’t get to know. For there is still a reg on the books that allows those holding the toxic debt for which there is no market (and there is definately _no_ current market for this crap) -- to mark it as full dollar for dollar value in their SEC filings. That has got to change. To quote one of my heroes Dr. Strangelove “So, Vye don’t you tell de vorld, eh?”
I’d especially love to know exactly how many trillions worth of collapsing ‘units’ AIG has ‘insured’. I suspect the number is mind-blowing.
Enough already… Your point is a valid one.
^,,^
|
|
groaz
Big Wall climber
italy
|
|
|
Feb 27, 2009 - 04:29am PT
|
How many american climber are in this bad situation?
The italian committee Help Jim Bridwell is very sorry about the mortgage of John Bachar (note the same J. B.), expecially because thesen't the first worst house-problem of Bachar...
Good luck!
|
|
Dick_Lugar
Trad climber
Indiana (the other Mideast)
|
|
|
Feb 27, 2009 - 07:04am PT
|
"I wrote the same thing weeks ago, how about tossing me a bone?"
Here's your bone Fatty, don't choke on it! J/K...I musta missed your post Fatty. I'll go back through the archives and look it up. You have to admit though, Pip does have a way with words that catches the reader's eye, for example:
"AIG is another notable pig at the feeding trough..". Now that's just good writing!
Edit: "It amazes me, however, that so many refuse to put blame on people accepting these mortgages who clearly couldn't afford them."
Blue, what don't you get? Not buying a house with no money down is like a fat kid not eating a piece of cake at his birthday party! No big mystery there..
|
|
Chris Roderick
climber
|
|
|
Feb 27, 2009 - 10:31am PT
|
The bonuses the executives at the AIG CDS unit paid themselves on fictitious profits that eventually turned into massive losses that the taxpayer is now covering, yup "pigs at the trough" is about right.
|
|
Matt
Trad climber
primordial soup
|
|
|
Feb 27, 2009 - 03:58pm PT
|
hey pip- good post!
just one thing to add:
re: In the very late ‘90’s and into the early 00’s, the biggest institutional brokers (who were forever looking for the next cash cow) came up with idea of bundling hundreds of retail (home) mortgages into a single mighty ‘unit’ of $10mil or $100mil (or more) each -- that they could then sell to their largest investors (like massive pension funds all over the world).
the one tidbit you left out is that the removal of regulatory obstacles to these transactions, by something added last minute to a bill clinton signed at the end of his presidency, opened the door,
i used to have a link to a really good article (maybe i can find it soon enough to add it in here) but i am not sure where it is-
here is a blog post w/ sufficient information, although i concede that the source is not necessarily an authority- still worth a read IMO.
http://www.dailykos.com/storyonly/2008/9/21/9322/74248
|
|
|
SuperTopo on the Web
|
Let us know!