Subprime loan mess ... Really WTF?
 

"stated income loans" ... "no proof of income loans" And we have a crisis? No shit!

I can remember getting a loan and having to explain why a past cable bill was 60 days late. (I had moved but kept getting billed) That's how lending once was, hard-ass but effective, good business.

Imagine having a category of loans that don't require proof of income ... a category where the customers word is taken at face value? For hundreds of thousands of dollars.

Not all borrowers were fuck-ups many just needed to be told they are approved but for a lower amount keeping within their budgets. It would be interesting to know what percentage of defaulted loans are by first time borrowers. Anyone going thru the old established loan process probably knew better. The lending institutions certainly deserve what is coming the rest of us don't.

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The problem is they were bundling the mtges and using to pay out higher interest on savings. Thus attracting more customers etc. Citibank was insuring the mtges and thought this was a safe no brainer. Everyone was making huge bank as they could pay higher rates then money market and still keep a bigger cut for themselves. I think we know the rest.

My friend had theory its not the loans its people losing their jobs. The way he put it to me was if your mortgage went up $100 could you pay it? How about 300$ or $500? You can find away to keep your house but with no job its a dead point. Made me go hmmmmm.