March 01, 2008

So, won't it be fun to see who holds the Liar's Loan / Alt-A toxic mortgage garbage?

It's MortgagePANIC Round 2!

Let's get it on!


Anonymous said...

Problem began when they allowed this to be a ZERO-down loan for EVERYBODY, not just the self it becomes a liar's loan. Prior to that, delinquency rates were low and it allowed self employed people to get an loan. Common sense used to be that if you're self employed, have a 10-20% down payment, verifiable assets in the bank, and decent credit, you're probably
not lying about you're income and can handle the payments. Allow basically anyone with a pulse to get this loan and demand for homes skyrockets along with prices and then the eventual defaults. Wall St. got greedy; I worked in subprime and every month the requirements got looser and looser because the investor (i.e. the Street) was willing to buy it. Anyone who didn't see this coming is a fool. I guess in a way it was predatory lending but in the end where is the buyer's responsibility to only buy what he can truly afford? I had the brains not to overspend on my home so why should I bail anyone out?

Anonymous said...

We Americans are sheer geniuses. We live our lives beyond our means, fund it with credit, and then sell those worthless pieces of credit to the Dutch, Germans, Chinese and Japanese who do save their money. They are happy to have a piece of IOU and we are happy to live in our McMansions, large SUV's, 50 inch LCD HDTV's, etc... As an American I love it because we don't hold those worthless pieces of papers, they do.

Anonymous said...

The real fun will be when derivatives blow up.

Sick and Dying America said...

Who gives a sh*t wo old what?

Nothing ever changes for the better in America, more taxes, less rights and a patently corrupt and dangerous government run by wall street and oil still in office happily plundering the nations wealth and killing its youth IMHO.

All without protest, riots or changes of any kind.

America is sick and dying.

Anonymous said...

It will be the taxpayers holding Alt-A. The only question is how much will we pay for it?

i've had it said...

The alt-a debacle is going to be worse than subprime because there were more of these loans written than subprime. note how the alt-a's came after the subprime mortgages. why was that? because after sucking the well dry with subprime through fraud and giving 500k loans to people with 50k in income who could pay the loan only for the two years of low interest, they went after the folks who couldn't document their income at all!! that's what those alt-a loans are...given to folks who could not document their income. with the impending recession, high inflation ,and oil spiking these folks won't be able to pay their loans back...that is, if they could at all in the first place.

that 10 billion of alt-a's were downgraded yesterday just goes to show we are now beginning a new cycle that will last until 2012 when the alt-a resets start to end.

we are screwed. said...

As a Scottsdale escapee, this is the fun I've been waiting for.

Contrary to popular belief, Scottsdale isn't a subprime market, it's an Alt-A liar's loan market. Everyone there had pristine credit because they all live on credit. Gotta keep the credit score high to continue the Escalade leases, 30 credit cards, etc.

Just about everyone I know (or know of) in Scottsdale bought with no-doc, no-down, piggyback joke loans. So this is going to be the real fun in watching Arizona's fake economy collapse once and for all.

Anonymous said...

First, they stop paying their property taxes as is happening in the most expensive areas. Tax liens are becoming more numerous than bank foreclosures.

State budgets are getting killed!

George #43 in exile from Planet Mars said...

"So this is going to be the real fun in watching Arizona's fake economy collapse once and for all."

Substiture 'America' for 'Arizona' and that about sums up my position.

Take it in the A*s Americans. You have earned it.

Anonymous said...

Who is holding all that toxic crap? Why, it's in all those middle class 401K retirement plans. Where else would the bankers put it?

Anonymous said...

The financial engineering revolution that began under Greenspan served to spread risk out so it was not collected in a single place.

Sounds good when times are good because if you are a large bank, say, you can sell off your risk in the form of bond "tranches" and other instruments. But the flip side of this is that the risk never truly goes away, and when it is spread out to the furthest possible extent, it means that EVERYONE gets a piece of the risk.

So even if you don't hold risky paper yourself, the "new paradigm" means you will experience the risk from that toxic paper one way or another. If you invest in plain-vanilla stocks or bonds, you are at risk because the companies you are investing in hold risky paper. Keep it all in cash? Hope you enjoy inflation and the falling dollar. Put it in real estate? Well, we all know how that goes. And so on. Nobody escapes, there are no safe havens.

Nobody is holding the hot potato. Instead we all have mashed potato on our faces.