I agree with a Republican today

I don't say this often, but I'm in agreement with a republican today. Senator Judd Gregg spoke today on the Mortgage Crisis package. He is against helping out the lenders who targeted consumers for adjustable rate loans, who looked the other way when appraisers fudged the value of the homes they backed. He is against helping builders and investors who speculated on the bubble and lost. The homes are still there, they will be purchased and loans will be issued. Business will go on, take your losses. The party that cannot help themselves in this situation, the foundation of the economy, (I hate saying this) is the consumer. You know, the people. His concern with who will be buying the debt (you know, our new creditors) is my concern as well.

Financial Meltdown Doesn't Hold Water

Dean Baker Financial Meltdown: "But the cover stories don't hold water. We can keep the banks running without bailing out the incredibly rich people who drove them to ruin. England showed us the way earlier this year with its takeover of Northern Rock, a major bank that got itself in trouble with bad mortgage debt.
We can also help homeowners without bailing out the banks. The rescue proposals currently on the table would have the government buy or guarantee mortgages on homes that are still hugely overpriced. These proposals could give hundreds of billions of dollars to the banks, while providing little help to homeowners. Most would still be paying far more on their mortgage, property taxes and insurance than they would to rent a comparable home. Furthermore, the bailout conditions virtually guarantee they will never have a dime in equity."


During the Great Depression, a massive bailout of savings&loans was made. It didn't help. Some are adamant this action actually caused the depression. This was less than 100 years ago, how can we be about to make the same mistake? I get my thoughts on this from vague history class memories, below is a link to someone with a tad richer credentials:

Lessons from Bailout History
Joseph R Mason
Associate Professor of Finance and LeBow Research Fellow, Drexel University
LeBow College of Business, Senior Fellow at the Wharton School, and Financial
Industry Consultant, Criterion Economics, LLC. Contact information:
joseph.r.mason@gmail.com

Not Rocket Science or I Need a Raise

WaMu Accused of Pushing Inflated Appraisals

This perpetration of fraud was noted by me on Sept. 18th in a blog entry titled ( "Confessions of a Mortgage Broker". ) I state this not to shine a light on my powers observation, but to shine a light on the fact that if I as an uneducated individual can see what happened , why is it taking so long for educated people 'In the Know' to realize the situation and take steps. Interest rates went down, so the price people could afford went up. Once the realtors and sellers realized this, they raised their selling prices. Lenders of course wanted these larger loan contracts and so loosened the appraisal requirements. This lead to appraisers 'Bumping' values. They accomplished this by going outside the normal mileage limits for comparables and exagerating details on the appraisals themselves. My own lender stated to me "Don't worry about the appraisal coming through for the price, My appraiser will justify almost any value I need". My own property was listed with a detached garage to accomplish this. (a fact I didn't realize until a year later when it came time to re-appraise).
The situation with the housing market will only get worse quantumly unless someone does something NOW! Those people being refinanced with help from the newly passed legislation regarding ARM's are only the TIP of the iceberg. NO ONE attempting to refinance the home with a 'Pushed' appraisal will be approved once the 'Real' value is re-established. Lenders found to have participated in this (almost all in every market effected) MUST be made to to refinance these loans based on their "Previously Accepted Value" regardless of the customers current circumstance in order to avoid an economic disaster. Lenders pay for their indescresions and gain credibility back from the public, Customers will pay (refinance fee's) for their failure to research the actual value of their home on their own and gain the ability to retain their homes, We as a country will pay in probable higher fee's and less money making it's way into the retail sector, but we will gain stability and the all important Moral that stability brings!


Story Published: Nov 1, 2007 at 10:47 AM PST
Story Updated: Nov 1, 2007 at 3:30 PM PST
By Associated Press


ALBANY, N.Y. (AP) - New York Attorney General Andrew Cuomo said Thursday a major real estate appraisal company colluded with the nation's largest savings and loan companies to inflate the values of homes nationwide, contributing to the subprime mortgage crisis. "This is a case we believe is indicative of an industrywide problem," Cuomo said in a news conference.
http://www.komotv.com/news/local/10945796.html


Sunday November 4, 2007 - 07:11pm (PST)

Confessions of a Mortgage Broker

Lenders, their agents, and the appraisers who backed it all up made their money on this and should now be ready to cut deals with these people. Refinancing anyone who requests it, regardless of their current situation or property value, into a fixed rate loan with appropriate interest rates. Sure, they'll lose some money in the long run but less than if they allow them all to foreclose. Consumers should have known better too, and will have to pay another round of closing costs as well as deal with years of repercussions from bad credit.


Watch the ABC News Video Here


Tuesday September 18, 2007 - 05:40pm (PDT)