There was a line which mentioned "the loose underwriting that caused the subprime-housing bubble."
I don't see anything that says this is more than a jumbo loan where the guy had a fair amount of money, a company, probably decent documentation, and a more sophisticated knowledge of business/mortgage practice than your average bear. He probably had this home at a pretty decent interest rate. So for the writer of the article to term this part of the "subprime-housing bubble" begins to start muddying the waters right up front. (It's a little like the loose-thinking that causes people to say we were "attacked by Muslims". We weren't. We were attacked by terrorists and criminals, who may have been self-professed Muslims. It would be a mistake to say we were attacked by Catholics in Tim McVeigh's (and associates) bombing in Oklahoma City, or by Baptists in the church bombings by the criminals from the Ku Klux Klan. They were just criminals, and only tangentially associated with their religion).
I have a similar problem with the word "dodged" - the owner did nothing wrong. He simply asserted his right to see documentation when a new company that he had not done business with before showed up on his doorstep demanding his keys, so to speak. It was not until then he discovered an impropriety, and it was THEIRS, not his. Same with the second case. We should applaud people who successfully stand up for their rights and win - there are far too many cases of people being intimidated for standing up for the rights and privileges people fought and died to obtain for them, and it is the height of hypocrisy and treason to question their free exercise. (I am not referring to the header of this article so much as a general tendency I have seen growing in our society over time).
It is also curious that they say this started a movement, but according to the article this started in 2003. As far as I can tell the fraud in signings wasn't really discovered until they tried to foreclose on
this home..., which makes me wonder how many loans involving fraud by lenders and servicers occurred in that 6-7 years.
But the thing that really stands out here are the numbers. From the article:
"$1.1 Trillion
According to an Oct. 15 report by JPMorgan Chase & Co.’s securities unit, some $2 trillion of the $6 trillion in U.S. mortgages and home-equity loans that were securitized during the height of the bubble, from 2005 through 2007, are likely to go into default. The report says the housing bust will ultimately cause losses of $1.1 trillion on those bonds."
Yet we (taxpayers) loaned out $15 trillion to the investment banks on Wall Street, (documented in, among other places, "Bailout Nation" by Barry Ritholtz and "It Takes a Pillage" by Nomi Prins - the last author has a page with a running total of the bailout in which TARP is just a line item
here...) which has given them the ability to borrow billions of dollars at essentially zero interest, while being paid interest from the government which has now totalled hundreds of billions of dollars.
Which leaves me with questions...
Why, if the losses in the subprime market were to be $1.1 trillion did we give Wall Street $15 trillion to make sure they could pay billions in bonuses to the people whose reckless and greedy behavior gave us this financial crisis?
Why, given that the government could have bought every single troubled mortgage for much less than half of what we, as taxpayers, paid out, renegotiated loans and kept a huge hit from housing away from the economy, did they elect to wash their hands of it and send boatloads of cash to Wall Street, leaving the American taxpayer on the hook for a problem that is nearly guaranteed to drag on for a decade, with millions of Americans suffering needless tragedy and in some cases death in the wake of this behemoth?
When you read a bit more, you find that there was about $140 trillion (estimated) in leveraged derivatives off the books in those banks. THAT'S what we were bailing out, and continuing to term this the "subprime crisis" lets the people whose avaricious and perhaps criminal behavior completely off the hook, while allowing people to blame people who tried to reach for what they thought was the first break in their unreasonably hard day-to-day lives - only to find out there was a wolf on the other end of the rope - and that IS a crime of the worst order.
Maybe we shouldn't be calling this the subprime crisis? We should be calling it the First Great Bank Robbery of the 21st Century.
I really liked the quote from the exec officer at LPS "We are dealing with sensationalism versus facts". Seems like that would be a good defense for a guy that committed armed robbery. "Why yes judge, I had a gun, and I pointed it in their face as I took the money out of the register. But I didn't shoot anyone, so this is just overblown. How about a couple days time served and you just send me home. I shouldn't be the victim of this sensationalism".
Thank you for the post - it did have some good information.
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