re: What Happen with the Sub-Prime Mortgage Crisis

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I took out my first home mortgage during the height of the lending boom. We were offered to finance up to 200% of the value of our home. The lending agent with the best rate didn’t have an office. There was unlimited money available to choose from. We financed 100%, no money down, and got into the house without pmi by taking an 80% first and a 20% second. There were no apparent rules or limits. We didn’t default.

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the first time I bought a house was before all this started. when we moved finally, was in the middle of all this fun and we had very much same experience as you. I thought I had dreamt the first shuttle run (as a nightmare). we were shown the golden keys. still haven't defaulted.... unless this is all a sham now too.

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Someone told me people making 50k a year were getting $550,000 mortgages. That’s insane.

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True story. Right before the collapse my wife and I were buying a home. Neither of us technically had a job yet because we were both finishing grad school when we applied for mortgages. Our combined income was going to be approximately $110K annually by the time we closed on a house. My broker, who was a family friend, told me we would be approved for a ballon mortgage of $700K.

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Our combined income was going to be approximately $110K annually by the time we closed on a house. My broker, who was a family friend, told me we would be approved for a ballon mortgage of $700K.

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If you make 110k with minimal debt you can qualify for a 700k mortgage. Not that crazy of a sceanrio

Ok but it's not in the lending world

You qual off income before taxes

Your payment at a 6.25 on a 30yr would be 4300 + taxes at 100% financing. DTI goes to 55% if you didnt have massive minimum debt payments it wouldnt be crazy to the broker

$4300+taxes+mortgage insurance would be over 50% of your monthly take home pay.

That’s insane.

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But you can't separate CDSs from the Sub-Prime Mortgage Crisis

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Where did I say that you could? You said the problem was and is CDSs, and they proceed to run down a litany of problems without mentioning CDSs.

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Go back and read what I said

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I did. You said "The problem was and is....Credit Default Swaps...."

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Why? Bc the lending companies won't disapprove any loans bc they know they're just going to sell these shitty loans.

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What does that have to do with CDSs?

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CDSs and bad loans to people that should never be approved go hand in hand.

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How so?

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And the securitization industry that facilitated the banks being able to continue loaning the money.

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they wouldn't have been able to do this without the credit agencies. that's why i put them #2 (and they probably should be #1)

if those MBS's were given the proper risk assessment, the banks never make those loans (because the investment demand would have cratered)

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I took out my first home mortgage during the height of the lending boom. We were offered to finance up to 200% of the value of our home. The lending agent with the best rate didn’t have an office. There was unlimited money available to choose from. We financed 100%, no money down, and got into the house without pmi by taking an 80% first and a 20% second. There were no apparent rules or limits.

We didn’t default.

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yeah. ditto. we bought a house for 0 down that was way too much for my $35k a year job right out of college. we just didn't have student, credit card, or car debt so we could afford to make the payments and were never late.

what was really shitty was that i got a new job in a new town in October 2008, put the house on the market right before the crash. no offers within 70% of the asking price for 6 months. then had to rent at a loss till we finally sold it 6 years later.