Subprimes: From Bad to Worse

While we are arguing over political issues that are not true issues the dollar has sunk to levels not seen in years. The level of debt is astounding. Corporate oversight is at an all time low not seen since the 1920???s unregulated stock market or the days of the robber barons and monopolies that crippled the economy stifling competition. We have a housing market that is more like a funeral than a market with upside down mortgages, foreclosures, and evaporating value. Then add in the geopolitical issues that destabilize the energy supply, like the Middle East and South America. Plus there is the Individual debt, abusive business practices, unsustainable business strategies, corporate scandals, and general greed. Then top it all off with trade imbalances, national debt, war spending, poor ignorant management of the institutions of power in the nation, and we are still talking about issues in politics that have no real barring on how to fix a broken system. We are shocked by republican or democratic sex scandals. We are fighting over, race, gender, or religion while the real issues remain on the sidelines. We are failing the future generations if we continue the madness. We will fail the world if we do not leave behind our puritanical culture war and unify to correct the real problems facing the nation. More morality will not fix the economy. More religion will not fix the economy. The free market will not fix the issue of oversight, product safety, or ethics in business on their own. We have had 25 years of Milton Freidman economics and Leo Strauss or Irving Kristol political ideological results. We have a divided nation that is bankrupt both morally and financially, led by those proclaiming the influence of religion fused with government, a free market with an absence of oversight, and a government that under conservative republican control wishes noting but the elimination of government except for the military. We are seeing the fruit of their tree rooted in outdated, ignorant misconceptions of ideology, theology, ecology, and sociology. The failure of their political agenda has been the disenfranchisement and general distrust of government and the other higher institutions of the nation. They have betrayed the public trust not by sleeping with a call girl, rather they have violated it with absolution water-boarded by blind ignorance and a romanticism for an ideological concept that flawed with a focus on the ???ME??? instead of the ???WE.???

Personal responsibility is often mentioned especially by the right wing of the Republican Party. The all to familiar phrases used are ???pull yourself up by the bootstraps??? or ???man up??? and various other lexicons. Why then should corporations ever be bailed out for their poor judgment or mismanagement of business? Why should government ever assist the ???free market??? with tax breaks, tax shelters, subsidies, and vast grant programs? Should the ???free market??? be allowed the freedom to suffer from their own mistakes? Every time we the tax payer jump in and bail the market out we are allowing business to skate from personal responsibility, the very antithesis of conservative ???free market??? dogma. The goose must not care about the gander, only the goose. We have been bailing out scandals, fraud and massive debt for a long time. Lately we have been bailing out debt with debt and we wonder why the market has collapsed like we have never seen since the Great Depression. The last straw that will break the back of the flailing market is unemployment and further erosion of the dollar. Can the neo-conservatives follow their own advice? I doubt it. The problem goes deeper than just economic hypocrisy. There is a systemic cancer within the modern capitalistic establishment. Corporations have since 1890 or so have been granted the equal application of the law under the 14th Amendment. Many have complained before me, so this should be nothing new. I feel that is the hart of the issue is a free market stampeding toward the cliff like buffalo hunted by the injustice of the abuse of the legal system of the US. The favoritism or unequal weight of law is leaning drastically toward market benefit. The legal argument of corporations is that they are equal to humans. Really? There is more law on the side of the protection of the Market and Corporations than there is for the individual living breathing citizen. It does not require legal council to come to that conclusion. The end result in my opinion is that we now have a separate and unequal class of citizen in the US by weight of law alone. If we also consider the true definition of a citizen as a human or person the corporate legal grounds for their argument fall on their face due to the merits of further in-depth thought.

Los Angeles 02/2008 DATELINE --- It's amazing how many homeowners will not fight the foreclsoure process. According to borrowerhotline .com, more than 70% of american homeowners accept their fate and eat the pain of a forclosure. This information is offered by Maher Soliman, the web site publisher and managing director for NLS.

According to the website, in June this year the secretary of Housing and Economic Development of the Patrick administration Dan O???Connell took the initiative along with government officials and top mortgage firms??? executives from Massachusetts to develop means through which foreclosure can be avoided and the foreclosure victims can be aided.

Delinquent Sub-prime loans were accentuated to be the main reason responsible for the soaring rise of foreclosure victims. Borrowers with bad credit history were allowed with high risk loans as they were tempted seeing the initial rates were low. The ravaging effect started when the rates of interest shot up unexpectedly high. Enactment of laws checking the foreclosure rates were suggested by Governor Deval L. Patrick.

In April in meeting called by the Patrick administration it was suggested that the State should financially help to refinance loans to reduce foreclosure rates.

Reforms aiming to help the debtors to catch up were planned and corresponding schemes were passed in 2006. The plan targeted to provide defaulting hose owners to catch up by extending the grace time from 60 to 125 days. Unfortunately the plan failed to go very far.

NLS and borrowerhotline are consumer homeowner advocates pushing to stop foreclosure due to predatory lending practices. Call Direct at telephone 310-435-2628

www.borrowerhotline.com ....and spread the word to friends and workers. This has to be stopped! Find out what you are entilted to receive!

I don't believe for one minute that the people who took out these loans are entirely to blame. A few years ago we engaged a realtor. I, being the paranoid anal-retentive control-freak type, had put our income and budget on a spreadsheet down to the last penny, and decided what we could afford to pay each month on a mortgage, and then figured out the maximum price a house could be to achieve that at the then-interest rates. However, our "mortgage broker" the realtor engaged "pre-approved" us for a mortgage that was over 50% again what I had decided to allow. I told the realtor I wanted a house in the price range I had calculated, and she spent the next 6 months showing us things at or above what the broker "pre-approved" us for, in spite of my repeated complaints. She had no intention of doing what was in our best interests, she and the "broker" her company used intended to fleece us and put us in a mortgage we could not afford. Needless to say, I did not buy anything from her or renew the contract with her company. I told the next realtor we hired exactly what had happened and told her that I absolutely would not buy anything from her if she didn't show us houses in the price range I indicated.

I doubt very seriously that most people have any idea that they cannot trust their realtor and mortgage brokers to do the right thing. They presume the people they hire are representing their best interests, and have no idea that they have no intention of doing so. They trust the professionals, who then screw them royally.

Doesn't anyone realise that Globalization is about big hunters with big guns for $$$ and bankrupting America has only just begun. When cash is cash and equal everywhere we will have arrived. At that point there will be no donut flavor choices. I am all for it except that human nature has always been our worst enemy.

Daniel, sorry, your report is not quite accurate. 16% of all mortgage deliquencies are "sub-prime"- that means that about 84% of delinquencies are in "prime" mortgages. Of all of the sub-prime mortgages issued in the past three years, just over 20% are delinquent. So wake up folks- the problem is NOT only in sub-prime loans. Also, the problem with current funding is not that banks and mortgage lenders are hoarding cash. They typically package and then sell their mortgages. Since no one is currently buying these things, mortgage lenders have no funding pipeline or capital to hold additional assets on their books. Finally, regarding the "BIG BAILOUT PLAN" - It is much ado about nothing. It will only cover a small portion of loans. The "1.2 million homeowners", read a little deeper- that is really "potentially up to 1.2 million..." First, it covers only ARMS and only those that have been made in the last two years and have re-sets starting in 2008. From there, rule out anyone with late payments or low credit scores (hmmm, if they didn't have a low credit score, why get a sub-prime loan anyway?). Also, we have to rule out anyone that has a good enough credit situation that they "can afford" they increased payments after the reset. Oh yeah, by the way, these are "voluntary" guidelines, that is, the lenders and MBS holders can just say "no" and that's that. Finally, while this can potentially help up to 1.2 million borrowers, it does nothing for the 2.5 million homeowners that are currently delinquent or the mortgages currently in default.

There are a few factors no one seems to be discussing. For those of us in a paycheck to paycheck world. At most we will see and have been seing pay raises of 3.5 to 5%. Yet, Gas has gone from $1 per gal to $3+. Groceries like wise has increased. The cost to heat your home, Auto Insurance, Home Owners insurance all have gone up. Now the kicker. Healthcare cost. mine went from this year aat $395 a month to $738 a month. Now one does not need a business degree from Harvard to figure out there will be a lot of defaulting going on.

The real underreported story here was touched on in mentioning that real household income has been flat since 1999. Whatever growth has occurred under Bush hasn't benefited most people, just the relative few at the top. And Bush continues the borrow-and-spend GOP tradition that is hammering the dollar now; 73 percent of the national debt was run up under Reagan and the two Bushes.

Instead of getting raises commensurate with productivity like in the old days, workers have just been told to work harder for less. The great postwar housing booms from the end of WWII to the mid-70s were built on fair and rising wages, modest houses and fixed-rate mortgages. Today we have builders oversupplying the high end and ignoring the low end (if the market was so great then we wouldn't need Habitat for Humanity). House prices are still way too high relative to average incomes in most places (not just California and Hawaii!). Instead of income people are having to plug the gap with debt. And of course that's unsustainable.

This is selective blindness. Sure the homeowner signed up for a bad deal. But the lenders deserve at least half the credit if not more. Who is the more sophisticated financial party in these deals? The lenders knowingly pursued borrowers that they knew couldn't repay these loans.

Katti, your situation is unfortunate but misses the point. You can wrap any bad decision within the wrapper of bad circumstance and make it sound like it deserves ameliorated ramifications and still be completely wrong in the process.

"Domestic violence... Kids... loss of income... and so I robbed a bank because I needed the money"

"Domestic violence... Kids... loss of income... and so I gambled my paycheck at bingo"

"...and so I signed a bad mortgage hoping my credit would be better in a few years and my income would improve before it reset..."

The point is: it was your decision, your gamble and, sad to say, your loss. People across the world, every day, make bad decisions and pay the price, some with their lives.

It is not, however, the responsibility of anyone other than the decision maker to fix it or suffer the fallout of those decisions. That's called personal responsibility and sometimes taking responsibility for your actions isn't fair.

You may not be at fault here, but you are responsble and yes, there is a difference.

That difference is to look at a situation like this and take some solace in what you were trying to do while accepting the ramifications that accompany the fact that your plan didn't work.

Let's see, the banks will only make 7% instead of 12%. No that's not right. They won't make anything if the loan defaults. And they may not get all their principle back! Sounds like a bailout for the banks and loan companies to me. Helping the homeowner is an unintended side effect. I think they only want to keep the home borrowers alive so they can continue to suck them dry.

kattidreamer--what does that have to do with the article? I appreciate the rant, and am sorro for your situation. But who exactly are you talking to? Nobody mentioned you.....

kattidreamer--What on earth are you ranting about?

Sounds like Herbert Hoover during the stock market crash

All of this sounds like Herbert Hoover during the stock market crash.