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| Home Front Economy | |
| Was Sec. Treas. Paulson Aware of Mortgage Fraud? | |
| 2007-12-10 | |
| This opinion piece address several facets of the mortgage crisis. The hint that Henry Paulson knew of fraud in the securitizing of mortgages while at Goldman is especially striking, given that Goldman Sachs, Paulson's old firm, came out of August's credit crunch with the largest profit by far of any investment bank. From TFA: Goldman Sachs is the only major investment bank in the United States that has emerged as yet unscathed from this debacle. The success of its strategy must have resulted from fairly substantial bets against housing, mortgage banking and related industries, which also means that Goldman Sachs saw this coming at the same time they were bundling and selling these loans. If a mortgage bond investor sues Goldman Sachs to force the institution to buy back loans, could Paulson be forced to testify as to whether Goldman Sachs knew or had reason to know about fraud in the origination process of the loans it was bundling? Dunno... Anyway, the way this may well play out is that the coming problems from mortgages is so massive 2008 will be a massive turning out of politicians at every level,as voters come to grips with the behavior of our bankers.
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| Posted by:badanov |
| #10 Banks and investors don't win if the home market collapses. No, but they will learn a lesson that won't soon be forgot. And if it doesn't collapse, they'll learn another lesson. |
| Posted by: Nimble Spemble 2007-12-10 13:26 |
| #9 The only way to solve the problems are for house prices to drop and thus house affordability to increase. People with a geared investment in a bubble deserve what they get. |
| Posted by: Bright Pebbles 2007-12-10 13:18 |
| #8 Let me put it to you guys this way. The opinion from clients in the industry is overwhelming that Paulson had to have known what was going on. Sachs doesn't hold mortgages at the rates some Burgers might be thinking. With their profits noted Paulson had to have known. If you boys think this is is news wait until the fannie mae bad loan holdings come to light. The savings and loan scandle will look like small potatoes. By the way Zillow doesn't have flex live updates and the numbers are sometimes static and based on spread stats. Only a currently involved appraiser can read their output with any kind of accuracy. Trust me on this one. |
| Posted by: Icerigger 2007-12-10 13:06 |
| #7 Still wrestle with pointing out the "bad guys" in this debacle. What does the concept of the "market going south" mean? I look at the 4 br, 2.5 bath house I sold in CA in 90 for $260,000 and see that it Zillow.com valuation is $1.1 million. We needed 2 professional incomes to support this middle class home to raise our young kids. Just how many million $ homes can be afforded by young families raising kids? I don't care how many pay raises we have gotten, the pricing of real estate, and the allure of viewing ones home as an investment rather than a place to raise a family is what has lead us to this place. Certainly local and regional government taxation entities never acted to curb the "spike" in area housing prices... they just looked at how to spend the ever expanding tax revenue base. When viable mortgages are no longer available to the masses, what will become of the McMansions. I don't think the mortgage providers are close to being wholly to blame, nor do I think the Fed gov. is in a position to carrot or stick its way out of this sticky wicket. |
| Posted by: Capsu78 2007-12-10 12:02 |
| #6 Hey, if you've got the cash and you are young... now just may be the time to buy no money down. Make sure you know what you are doing. If you think you don't know...you don't and then don't buy. But if you DO know then ..hey... now's the time. There will be some good deals coming dwon the pike. Let them get stale... don't rush. The market says...buy low. There will be some lows if you have patience and some extra cash. Make sure you KNOW that it is low and then more power to ya. good luck, good hunting. |
| Posted by: Squinty Thrusorong6032 2007-12-10 11:17 |
| #5 "I'll teach you how to buy houses with No Money Down!" You don't hear too many of those on the radio these days. But you know? The one important thing I've learned from talk radio is this: now is the perfect time to buy gold. |
| Posted by: eLarson 2007-12-10 10:32 |
| #4 And you know what should make us really mad is that there are EASY solutions to this problem. All that the government needs to do is force the mortgage companies to provide alternate loan structures to those provided sub-prime loans. No, I'm not suggesting they get a free deal - but a fair one. Monthly payments can be kept manageable while loan lengths can be extended from 30 - 50 years. Or interest only payments can be made for a period of 7-10 years and then the rate will increase steadily increase beyond that point. What that does is spread out the ability of borrowers to get out from underneath their homes over an extended period and for the foreclosures to occur over an extended period. And the investors are better off because forclosures mean losses to them, not profits. Banks and investors don't win if the home market collapses. You and I don't win if the home market collapses. It would be an easy task to put borrowers, who were stupid enough to be sucked into these killer teaser loans, into a real loan that keeps them in their homes but does not allow them to get out of their obligations by structuring their payment and principle increases over a longer term. |
| Posted by: Whomong Guelph4611 2007-12-10 10:14 |
| #3 I agree. This was a fraud on a massive scale. I said so years ago. Lenders were making loans that they knew people could not repay. They were making their money on the loan origination fees and servicing of the loans. Then they would package up these crap-o-la loans and sell them on the open market through a variety of gimmicks. This is organized crime. The people who should be punished for this are both the borrowers who took on debts that they should have known they could not pay and the banks who created a machine to sell junk loans. But for the rest of us who don't deserve this, the adults should make the lenders who created this mess to eat into their own bottom lines to create the credit necessary to keep the entire housing market from going south. Think of it as restitution for their theft. Their balance sheets should get hammered as they dig into their own pockets to make sure that qualified borrowers can stay in their homes. Not for their sake, but for ours. |
| Posted by: Whomong Guelph4611 2007-12-10 09:49 |
| #2 Most of these loans should have never even been offered. |
| Posted by: Sock Puppet of Doom 2007-12-10 08:38 |
| #1 Yeah, it's the bankers fault people over extended themselves. |
| Posted by: Rob Crawford 2007-12-10 08:34 |