Well. it seems that “they” want the federal government to come to the aid of the banks in this mortgage fiasco. Why just the banks?
After all, greed was the main cause of this. It was greed on the part of the mortgage granters (banks and such), it was greed on the parts of those that bought the mortgages and repackaged them and greed on the part of those that bought those packages.
Oh, yes, it was also greed on the poor schmucks that bought too big a house for their budget. But, isn’t it the job of the moneylenders to know this beforehand?
But that’s right. They ALL counted on the values going up. It’s too bad the bubble burst and the value of that over priced $400,000 house (they planned on selling in two years for $500 - $600) is now worth less than it was when the mortgage was granted.
But, to be fair, who should take the fall? The lending institution that should have known that the housing values were shaky? Or the people who fell prey to lenders sales pitch from the lenders (banks) who said go ahead, buy big. The value will go up. We’ll even give you deferred and/or low rates …for now.
So Mr. and Mrs. Shmuck are stuck with a high monthly payment they never really figured on paying for a house they never could afford in real life had the lenders properly qualified them. They thought he could slide by just making interest payments until he sold the house for a profit in a few years. After all, that’s what the lenders told them,
So, both the lender and the poor Schmucks bit into the greed apple.
Of course, immediately after the papers were signed, that mortgage was sold to Freddie and Fannie Mae, which repackages these into big security bonds (based on increasing home values) and sells it to other investors who want their cut of the profits they expect the Schmucks’ eventual house sake to provide for them. The Maes then took their “profits” and bought more over-valued mortgage just like that the Schmucks. They just increased their share in the greed pool.
So, now The Schmucks, their bank, the Maes and the security holders all shared in that big ole apple.
As it now stands, there are still some mortgages and homes still in that loop. Those are the ones on which the banks and secondary mortgage brokers are taking a bath. Nobody wants to buy ‘em when everyone know they aren’t worth the paper they’re printed on. In fact, they’re worth less!
It seems to me that everyone took a pretty good chomp of that apple. But, whom does the government want to save? The ones in the middle! The banks and the Maes! What about everyone else?
The final buyers are kinda stuck. They bought knowing these were volatile, particularly over the past year or so. Unless they were guaranteed a profit, it was just another investment that could go up or down.
But, the poor Schmucks are still left holding the bag, as it were, and are still on the hook for high mortgages. If they can’t and don’t pay that exorbitant mortgage or sell their house at a price that can cover the mortgage, they lose their homes and credit ratings. The banks (or whomever holds the mortgage) will repossess those houses and still have their property.
(more)
