* liar loan mortgages are at the heart of the financial meltdown; the liars were some combination of the borrower, the lender or the broker
Posted by Lew Weinstein on September 24, 2008
Steven Malanga writes on Real Clear Politics …
-
The mortgage mess (which triggered the financial meltdown) began with a heap of bad mortgages made by American consumers who never came within a hundred miles of the card sharps on Wall Street.
-
The inability (and in a good deal of cases, the unwillingness) of these same ordinary Americans to pay back these loans, many of which are sitting in mortgage backed-securities held by institutions around the world, helped tilt us toward this systemic threat to our financial system.
- BasePoint Analytics, a research firm, has estimated that 70 percent of subprime loans that default before they reset (exactly the kind that trouble the market right now) contain some kind of
- misrepresentation by the borrower, lender or broker, or some combination of the three.
- These mortgages became known as ‘liar loans’ because many people without sufficient income used them to qualify for financing they otherwise couldn’t get.
LMW COMMENT:
Some of the people who took sub-prime mortgage loans to purchase homes they couldn’t afford were surely pushed in that direction by predatory lenders operating in the John McCain fostered “no regulation” environment.
Whether they were too ignorant to know they were heading for personal disaster, and even if they were led that way by lenders who did know the inevitable result, the fact is that in this case and others, ordinary Americans often need government regulations to protect them, and the rest of us, from their own actions.
Such regulation is one of the pillars that distinguishes civilized society from the law of the jungle. We need to establish the appropriate, and ever-changing boundary between unlimited freedom and the needs of a free society.
Finding such balance takes intelligent, informed public leaders, people like Barack Obama and Joe Biden.
On this dimension, John McCain and Sarah Palin are but laughable imitations of what America needs.
To read the entire article, click … http://www.realclearmarkets.com/articles/2008/09/the_mortgage_mess_began_on_mai.html
