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re: So, maybe we should force people to pay for stuff...
Posted on 9/30/08 at 12:26 pm to H-Town Tiger
Posted on 9/30/08 at 12:26 pm to H-Town Tiger
quote:
like what exactly?
borrower's income
borrower's credit score
whatever info that could be lied about on paper to get loans approved
2
Posted on 9/30/08 at 12:29 pm to igoringa
I was not really talking about the entire process. The penalty profits may not seem large on an individual basis. If its repeated about a hundred or so times, I would imagine the fees would be more significant.
Posted on 9/30/08 at 12:30 pm to SlowFlowPro
quote:
well we have firms that, if they crashed, would have crippled wall street apparently
How does that make their income from, lets say underwriting of IPO's, phantom?
quote:
it's not FMW because that assumes that the buyers and sellers have a lot more information at their hands than the ones in these cases did.
What information was missing in your opinion. Have you seen the prospectuses for these? They disclose the mortgages by Fico, location, stated income % etc... there was a lot of ignored disclosed information.
Posted on 9/30/08 at 12:32 pm to Rollie Fingers
quote:
I was not really talking about the entire process. The penalty profits may not seem large on an individual basis. If its repeated about a hundred or so times, I would imagine the fees would be more significant.
To make sure I am not mis-stating your position, you think banks lent hundreds of thousands to people, on purpose, knowing they would not be able to pay the principal... to generate some penalty interest before they default. That is your position? That is what they were 'banking on' (to use your words?)
Posted on 9/30/08 at 12:33 pm to SlowFlowPro
quote:
borrower's income
Yup and the borrower signed that exact piece of paper stating that was their income.
quote:
borrower's credit score
Not too many cases of monkeying with this as the underwriter tends to run this themselves at close.
Posted on 9/30/08 at 12:37 pm to igoringa
quote:
What information was missing in your opinion
i'm not an investment banker
the ratings agencies gave bad info
these companies don't know what what they own and what it's worth...the people who bought the MBS didn't either, or else they wouldn't have done the deal
Posted on 9/30/08 at 12:42 pm to SlowFlowPro
Well the government provided ratings monopoly was a nightmare (regulation people there it was)
Shame on both of them
quote:
these companies don't know what what they own and what it's worth...the people who bought the MBS didn't either, or else they wouldn't have done the deal
Shame on both of them
Posted on 9/30/08 at 12:45 pm to igoringa
quote:
To make sure I am not mis-stating your position, you think banks lent hundreds of thousands to people, on purpose, knowing they would not be able to pay the principal... to generate some penalty interest before they default. That is your position? That is what they were 'banking on' (to use your words?)
Actually, the people that were highest risk were probably not asking for $500k range loans. But that is neither here nor there. They were banking on people paying outrageous PMI and interest and penalty fees. The gains there probably offset the short term losses on properties that cost about 80K - 100K. Is that better?
This post was edited on 9/30/08 at 12:50 pm
Posted on 9/30/08 at 12:50 pm to Rollie Fingers
quote:
Actually, the people that were highest risk were probably not asking for $500k range loans.
Heard of California, Nevada and Florida?
quote:
They were banking on people paying outrageous PMI and interest. They gains there probably offset the short term losses on properties that cost about 80K - 100K. Is that better?
You have no clue. The banks DID NOT HOLD THESE NOTES. Just because they still service them does not mean they hold them. They do not get the reward of the interest nor the risk of the default.. that was securitized away. Again, these mortgages are not on the originators books and never were for more then a month or two... so your 'banking' on not paying is ridiculous.
Posted on 9/30/08 at 12:50 pm to SlowFlowPro
quote:
borrower's income
borrower's credit score
whatever info that could be lied about on paper to get loans approved
unless you have a link that shows this actually happened, its just speculation on your part.
they approved loans they shouldn't have, that's not proof they lied to do it, as has been pointed out, the Fannie and Freddie were backing more loans to riskier borrowers, so the mortgage brokers and banks made riskier loans.
Posted on 9/30/08 at 12:52 pm to igoringa
Someone was getting the value of the mortgages back further down the line is your argument? What exactly is the difference. The organizations were getting benefits at the ultimate cost of the irresponsible buyers.
This post was edited on 9/30/08 at 12:54 pm
Posted on 9/30/08 at 12:54 pm to Rollie Fingers
quote:
Someone was getting the value of the mortgages back further down the line is your argument? What exactly is the difference.
The difference is your claiming the lenders purposely were 'banking on people not paying', when they had absolutely nothing to gain under that scenario as they dont hold the mortgage... it is symbolic of the lack of understanding of the issuer.
If you want to argue the lenders/brokers lent to anyone because they knew they could just pass the buck.. then you would be on to something... but to say they were 'banking on non-payment' is retarded to the nth degree.
Posted on 9/30/08 at 12:56 pm to Rollie Fingers
quote:
The gains there probably offset the short term losses on properties that cost about 80K - 100K.
Even assuming your premise was right (it is not), you are now arguing that lenders are going to get $80-100K out of people who cant pay their mortgage.... I mean seriously.... WTF!
Posted on 9/30/08 at 1:19 pm to igoringa
I am saying with a bloated interest rate and PMI on a 80-100K property, the profit made on 1 out of 5 risky borrowers was worth the losses that were passed down the line. The profit made on the no down bloated rates was the motive. So people with bad credit and higher rates and no money to put down would get sold terrible mortgages and were pretty much taken to the cleaners either by lenders or down the line after they got foreclosed on. Am I doing better Bloomberg?
Posted on 9/30/08 at 1:24 pm to H-Town Tiger
quote:
unless you have a link that shows this actually happened, its just speculation on your part.
there is a lot of anecdotal evidence, but i'm willing to be this investigation is fruitful
LINK
if it's not, i retract my comments
Posted on 9/30/08 at 1:39 pm to igoringa
quote:The banks are the professionals here. And, if the banks are making loans that they have no logical reason to expect to be repaid, then you're damn right, the banks should be blamed. Because, they are the ones who should have known, and whose business it was to know. They are the most at fault.
Yet the poor innocent homeowner had no idea borrowing $600K would be an issue. Oh wait, homes always appreciate.. so their was no risk. Hmm same logic as the banks... but again it is the banks responsibility to protect people from themselves... eh comrades?
Posted on 9/30/08 at 1:42 pm to Herb
quote:
The banks are the professionals here.
I am the professional of my money; you are the professional of yours. If I enter a bad debt agreement then it is as much my fault as anyone elses. Period.
Posted on 9/30/08 at 1:44 pm to Rollie Fingers
quote:
I am saying with a bloated interest rate and PMI on a 80-100K property, the profit made on 1 out of 5 risky borrowers was worth the losses that were passed down the line. The profit made on the no down bloated rates was the motive. So people with bad credit and higher rates and no money to put down would get sold terrible mortgages and were pretty much taken to the cleaners either by lenders or down the line after they got foreclosed on. Am I doing better Bloomberg?
You are getting closer.... you still got to retract the 'banking on it' language though. The lenders did not care whether you would pay or not.. they were passing the buck
Posted on 9/30/08 at 1:46 pm to Herb
quote:
The banks are the professionals here.
Dont forget to add in your fellow realtors... surely they knew when showing the house that their customers could not afford it... tsk tsk tsk
Posted on 9/30/08 at 1:46 pm to igoringa
I think we are saying the same thing now.
It was all profit because if they got paid, they were killing the people on rates and if they didn't they did not feel the loss.
quote:
The lenders did not care whether you would pay or not.. they were passing the buck
It was all profit because if they got paid, they were killing the people on rates and if they didn't they did not feel the loss.
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