Mortgage crisis

[ERCougar]

Originally Posted by MikeWaters

Here in dallas, most of the foreclosures are among the white middle class that bought houses beyond what they could afford.

The houses in my relatively modest, mixed-race neighborhood are not being foreclosed on.

But the pro-bailout forces will tell you it is all poor people.

Which is why this has gotten so much traction. I have a sneaking suspicion there are some politicians who have unwisely speculated.

[Indy Coug]

Yes, I'm primarily putting the blame on the mortgage companies. They should be smart enough to know do sufficient risk assessment to know what problems their underwriting guidelines were exposing themselves to. And I don't give a crap what pressures so-called government representatives were putting on them.

There was a feeding frenzy in the low interest rate environment and the hyper-competitivity led to wholesale stupidity.


Sincerely,

An actuary who is very familiar with risk assessment

[Mormon Red Death]

Originally Posted by Indy Coug

Yes, I'm primarily putting the blame on the mortgage companies. They should be smart enough to know do sufficient risk assessment to know what problems their underwriting guidelines were exposing themselves to. And I don't give a crap what pressures so-called government representatives were putting on them.

There was a feeding frenzy in the low interest rate environment and the hyper-competitivity led to wholesale stupidity.


Sincerely,

An actuary who is very familiar with risk assessment

what about the fact that a lot of people fibbed that their income was higher than it actually was?

http://www.slate.com/id/2189576

[BigFatMeanie]

Originally Posted by Mormon Red Death

what about the fact that a lot of people fibbed that their income was higher than it actually was?

http://www.slate.com/id/2189576

On my first mortgage, in 2000, I had to prove my income. On my last loan, they didn't even ask me to document. I couldn't believe it was so easy to get a mortgage. Of course, I made sure to get a fixed-rate mortgage and made dang sure I could afford the before I closed.

As your Slate article states, a "liars loan" is:

The term is mortgage-industry slang for what's more formally called a "stated income" mortgage—a mortgage that a lender gives without checking tax returns, employment history, or pretty much anything else.

People can fib all they want - the mortgage companies should have verified if they didn't want the risk. They accepted the risk of non-verified income loans, they should live with the consequences. I love the logic of bail-out supporters:

- It's not the fault of individual borrowers - it's the fault of predatory lenders
- It's not the fault of lenders - it's the fault of individuals lying about their income
- It's not the fault of XYZ, it's the fault of ABC - ad infinitum.

I just don't understand the constant search for someone/something to blame and for someone/something to bail out.

[Indy Coug]

Originally Posted by Mormon Red Death

what about the fact that a lot of people fibbed that their income was higher than it actually was?

http://www.slate.com/id/2189576

Isn't that what underwriting is all about? You get all the pertinent information (credit history, W-2s, 1040s, etc. etc. etc.) you need to determine what kind of risk you have. Face it, no matter how stupid, dishonest or naive the general public was, if mortgage companies had the proper procedures and controls in place, they could have stopped a lot of these problems before they ever began.

It's the story of the liar's loan.

The term is mortgage-industry slang for what's more formally called a "stated income" mortgage—a mortgage that a lender gives without checking tax returns, employment history, or pretty much anything else. Many of the loans that are in trouble now, or will be in trouble soon, fall into this category. But the term gives only the barest hint of the pervasive failure involved.

[BigFatMeanie]

deja vu