subprime meltdown
The
LA Times says that FBI agents told reporters that low interest rates and "soaring home values, [were] starting to attract shady operators and billions in losses were possible." According to the report, Chris Swecker, the FBI official in charge of criminal investigations, told reporters that the FBI thought it was going to prevent a crisis similar to the S&L debacle.
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"These homes for sale SUCK!" CNN has a interesting article about the squalid condition of many of the homes on the market these days.
"The properties smell," said Eve Alexander, an agent in Orlando. "You find maggots. The swimming pools are green. The lawns dry up. They're eyesores. Neighbors yell at us to water the lawn."
[
CNN]
indiana mortgage brokers
40% of Indiana's mortgage brokers have lost their licenses because they did not comply with a new law aimed at "raising the standards" of the mortgage lending industry. The law requires mortgage brokerages to "name a principal broker with at least three years experience who has passed a state exam and will oversee his company's business affairs," says BusinessWeek. Sounds reasonable, doesn't it?
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Subprime Meltdown
Banks don't always own the homes they're trying to repossess, a crucial oversight that residents facing foreclosure can exploit to stay in their homes—though not without effort. Mamie Ruth Palmer successfully sued the Bank of New York after the bank tried to foreclose her home without possessing the note securing the property. After six years in court, the bank agreed to slash her outstanding mortgage in half and waive $12,000 in foreclosure fees so she could keep her home.
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Subprime Meltdown
Yesterday the FDIC shuttered the 28 branches of the First National Bank of Nevada and the First Heritage Bank. Federal regulators will perform a nifty little magic trick over the weekend, and on Monday, the branches will reopen as Mutual of Omaha Bank. Aren't bank failures fun?!
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bailout
A new bill that will help 1-2 million homeowners escape their unaffordable mortgages by refinancing into new low-cost fixed-rate loans insured by the Federal Housing Administration (FHA) has passed the House and will now move on to the Senate. If it is eventually passed by the Senate and signed by the President (who is no longer threatening to veto it), will it help you?
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Subprime Meltdown
Ever hear of IndyMac Bancorp? Well, it's gone! Federal regulators seized the California bank spawned by Countrywide founder Angelo Mozilowhich, which had giddily doled out mortgages to lenders without requiring proof of income. Rather than blame the second largest bank failure in U.S. history on the subprime meltdown, the charmingly politicized regulators at the FDIC blamed the bank's demise on Senator Charles Schumer (D-NY). Huh?
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Over 400 people have been charged in the government's national mortgage fraud probe, called "Operation Malicious Mortage," which dealt with individual rather than corporate fraud. [
Reuters]
Two former Bear Sterns executives were arrested today for securities fraud. [
NYT]
mortgage meltdown
Grim numbers today from the Mortgage Bankers Association. 2.5% of all mortgages serviced by the association's members are now in foreclosure — 1.1 million homes. The rest of the numbers aren't any more cheerful. Both the rate of new foreclosures and late payments were the highest on record going back to 1979, says the AP.
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corruption
Meet Tracy Warren. NPR says she's not surprised by the mortgage meltdown because she was supposed to be in charge of preventing it. Tracy worked for a quality control contractor that reviewed subprime loans for investment banks before they were sold on Wall Street, and her company's biggest client was none other than Bear Stearns. Tracy says she found plenty of loans to reject. The trouble is, according to Tracy, after she rejected them... her bosses
unrejected them.
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rude
Apparently Angelo Mozilo, the CEO of Countrywide, has never made a mistake and needed help (from, say, Bank of America,) because he thinks that homeowners who are desperately trying to refinance out of their disastrous home loans and avoid foreclosure are "disgusting" if they look to the internet for help writing letters.
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Last week the best radio show ever,
This American Life, tackled the housing and credit crisis by talking to some of the real people involved with packaging junk no-proof loans into "sensible" investments. In the words of host Ira Glass and friends, it all comes back to "The Giant Pool Of Money." [
This American Life]
subprime meltdown
Countrywide would like you to believe that it put all that messy "predatory subprime lending" business behind it and is no longer coaching consumers to lie on their loan applications in order to qualify them for loans they can't afford... but are they telling the truth about telling the truth? One woman who recently contacted Countrywide about refinancing her home told NPR that sketchy mortgage lending is alive and well at Countrywide.
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credit cards
[
April 27, 2008. Latham, New York. Image thanks to Alex!]
Back in the glory days, when credit and food were cheap, it took a mere 2-liter bottle of Pepsi to bait customers into filling out a Walmart credit card application.
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securitization
Call it what you will, the borrower bailout/rescue/whatever
does not seem to be working. Foreclosures are still on the rise along with defaults and sad stories. And while those numbers go up, the economy continues to worsen.
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class action
Behind the scenes of the subprime and credit crunch hooplah, subprime-related class action lawsuits have been quietly building up a massive head. Navigant Consulting broke down the numbers on the gathering storm that will take years to dissipate:
- There are 448 subprime related federal lawsuits as of March 31 2008
- 170 federal lawsuits were filed in Q1 2008, vs 181 total filed in the last 6 months of 2007
- The Savings and Loan scandal of the 90's resulted in 599 lawsuits
- 57% involved at least one Fortune 1000 company
- 46% of the subprime related class action lawsuits are brought by borrowers
- 42% of those are related to disclosures made at loan origination
The Subprime Litigation Tsunami: Are We Dealing with Case Overload? [DSNEWS]
(Photo:
Getty)
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Consumerist
