Monday, August 18, 2008

Liars Driving the Mortgage Crisis

'Liar loans' threaten to prolong mortgage crisis: Financial News - Yahoo! Finance And the government, but we'll get to that later.
In the mortgage industry, they are called "liar loans" -- mortgages approved without requiring proof of the borrower's income or assets. The worst of them earn the nickname "ninja loans," short for "no income, no job, and (no) assets."
And Congress is out to save the lenders? Any lender stupid enough to give a loan to someone with no job and no assets deserves to go out of business. And those people getting those loans - under what I consider fraudulent circumstances - should lose their homes. But Congress is just talking about how the eeevil bankers are to blame. And the meida too. There is a section of this article where I am supposed to get all teary-eyed because someone didn't bother to understand the terms of the mortgage they took out. That adjustable rate mortgages often adjust their rates. That negative amortization often occurs when the payments are "too good to be true." Never sign a contract you don't understand. Never sign a contract you haven't read. Never assume that someone trying to sell you something is your friend. They may be, but there is no guarantee.

Oh, and the government? It set quotas for lenders to make loans to lower income folks.
Both [Fannie Mae and Freddie Mac] also were able to use subprime and liar-loan investments to meet government-set affordable housing goals.
See, the government was trying to help by getting more loans to people with less income. So it isn't far to see loans to people with no income.

Your tax dollars at work.

Now government didn't create this problem, but they did move it along a lot. Do you think government will solve this problem? You know, the problem of people signing contracts they don't understand. Because that is the problem.

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