Subprime crisis comes full circle

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A short memory is so convenient. Everyone is joined in righteous wrath against the evil banks for making so-called "subprime loans."

Cast your mind to the roaring 1980s: Home ownership was rising -- except among minorities. So hucksters harangued Congress, who in turn pressured the banks to make more risky loans to the unqualified. I write "unqualified," as that was the bank's reason not to loan the money. They didn't care about the ethnicity of the borrower as long as they could repay the loan.

But, faced with the prospect of calamitous regulation -- the same sort of unwinnable lawsuits the tobacco industry was undergoing -- and the inevitability of having to pay extortion to PUSH and the Rainbow Coalition, lenders said to themselves, "Sure, why not? We'll get their money, then resell to another sucker who will also probably be in default the day they sign the contract."

Then came the Law of Unintended Consequences: It was inevitable when those who weren't qualified suddenly were qualified, that those who were actually qualified for a nice, modest first home now qualified for the wave of McMansions that sprung up across the country. It all went well, much like a housing Ponzi scheme, until rates went up. Oops.

So we come full circle. The same race hustlers are again hectoring Congress, who once again threaten the banks -- for making loans they made after being strong-armed.

Dave Stewart Sr., Grovetown

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deekster
24
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deekster 01/01/08 - 08:33 am
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Same with the govenment's

Same with the govenment's "235 Housing" program of the 70's. No codes, cheap construction at half the normal payment. These houses were built everywhere. Then the recipients couldn't pay the "half payment" so they defaulted and the lucky second buyer got a "half built house for twice the payment. Then a lot of these houses were given to Vietnamese Refugees for $1 U.S. I love how the government provides for its sheep.

patriciathomas
42
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patriciathomas 01/01/08 - 08:56 am
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Those that refuse to learn

Those that refuse to learn history are doomed to repeat it. Once again the "dumbing down of America program" strikes home.

constitutionnow
0
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constitutionnow 01/01/08 - 10:14 am
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Deja vu all over again!! Get

Deja vu all over again!! Get rid of the fed...buy gold!

Beach Brat
0
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Beach Brat 01/01/08 - 10:25 am
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I dare the Feds to help these

I dare the Feds to help these people, I'll be the first in line for my free 2nd home on the beach. The 1st I worked for, in good times and bad, the American way. Thank You for a good letter to start the New Year.

jack
10
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jack 01/01/08 - 10:45 am
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I have NO sympathy for either

I have NO sympathy for either the buyer or the mortgage company. As for the buyer, there is an attorney at every closing that explains to both buyer and seller all the financial details of the closing, including interest, etc. So these buyers were either stupid or scammed the mortgage company by claiming income they didn't have (and the lender didn't check). I don't feel sorry for lenders as they purposely scammed the buyers by letting them buy more than they could pay for. I am NOT for the government bailing out wall street in this matter.

cparker
83
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cparker 01/01/08 - 11:17 am
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I agree that it is stupid to

I agree that it is stupid to buy what you can't afford....PUSH & Rainbow Coalition is not what's driving the train here. The mortgage companies are just as responsible. They paid origination fees of 1% on traditional loans, but paid 2-3% for sub-prime loans because they stood to make more money. I was offered a loan at Loans By Summerville that was 3% over Wachovia despite me having perfect credit. Imagine them dressing this type loan to seem beautiful to everyone? Mortgage companies gave the incentive to write these type mortgages by increasing the pay for loan originators and reducing the qualifications for borrowers. I agree the borrowers weren't totally hoodwinked and they probably should have said "NO". Many investors bought this paper in bundles because they felt they would make plenty of money on risky, soft paper and they did not. This was a risky investment that has gone bad. Besides, many of the people that bought these homes were real estate investors that knew the risk of the mortgage they bought & are now crying foul. Investors should not be bailed out, they should simply sell the homes and start over.

critter
2
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critter 01/01/08 - 12:51 pm
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The poor, poor, pitiful

The poor, poor, pitiful mortgage companies - they're so easily taken advantage of! These evil people who signed up for some of these exotic loans knew exactly what they were doing - after all, didn't they all have PhD's in Finance? They tried to take advantage of these poor mortgage companies and now look what's happened! We should throw every one of them in jail.

sneaky pete
0
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sneaky pete 01/01/08 - 01:39 pm
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You people are killing me

You people are killing me here. How many of you actually know how the mortgage business works? I doubt that many of you do. Well, I do. Subprome loans make up less than 2% of all loans. Loans by Summerville has been out of business for a while now and they were stright out crooks. By and far most mortgage companies are honest and full of good people. Public demand cried out for lower credit limits. Not investors and not mortgage companies. The public wanted more homowners and a larger tax base. But that's where you folks get amnesia. I do not support a bailout program of any sort, nor does anybody I know in the business. Augusta was not hit very hard at all by the subprime crisis because very few companies pursued those loans. Georgia is one of the few states left that require attorneys to be present to explain the paperwork to buyers. A lot of states only require a title company to do the closing. A lot of this is propaganda. If this were not an election year, I don't know if so much attention would be paid to this. Too many homes were built, too many lax measures were taken and too many people lost their jobs.

intheknow
16
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intheknow 01/01/08 - 03:35 pm
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Republicans are never the

Republicans are never the blame for anything. Rember they all walk on water and part seas.

jack
10
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jack 01/01/08 - 06:18 pm
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Cparker, the President has

Cparker, the President has said the government will not bail out real estate investors.

jack
10
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jack 01/01/08 - 06:23 pm
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Intheknow, I am glad yo

Intheknow, I am glad yo finally realized we Repubicans walk on water (compared to DIMocRATS). Should the DIMs (God forbid) have both Congress and the WH, this country will be come a welfare, socialist state.

JohnQPublic
5
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JohnQPublic 01/01/08 - 11:02 pm
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As the old saying goes, "If

As the old saying goes, "If it looks too good to be true, it usually is!"

patriciathomas
42
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patriciathomas 01/02/08 - 04:22 pm
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sneakypete, I agree with

sneakypete, I agree with almost all of your post. A real estate attorney would advise against sub prime loans every time for most people. I don't understand all of the job loss you're referring to. The employment rate has been very high for over 5 years (for those that wish to work).

Marko
0
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Marko 01/03/08 - 04:35 am
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I heard a report on teh BBC a

I heard a report on teh BBC a coupkle days ago about the subprime loan thing. CA was one of those states hit hard by it. Houses in Stockton which were at one time $200K are now $140K. The bank made the loan for $200K, the homeowner defaulted and teh bank loses $60K plus interest on that loan. Multiply it by several thousand loans and it's why so many banks, at least in CA are having problems. It's their own fault in many cases. but it does get the press these days.

Ms. Opinionated
0
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Ms. Opinionated 01/03/08 - 05:56 am
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Sure, if you don't like it or

Sure, if you don't like it or can't explain it, blame it on the Republicans.

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