P J Evans @ 40

A lot of those sub-prime loans got sold to hedge funds. Why the funds don’t want disclosure: they’d be shown to be hanging on the edge of a very big cliff. And that scares the people who run them.

WHAT?!? You mean the hedge funds managers aren’t really worth all those millions of dollars they got paid (and taxed like it was their own money they’d invested)?

Why I’m shocked, SHOCKED I say.

Not.

Which Presidential Candidate Works With A Hedge Fund?

Laura Doty @ 30

There are buyers out there, mopping up in a desperate market.

Maybe. But I think many of the foreclosed houses are just sitting around with for sale signs. Prices probably haven’t dropped enuf for the vultures to sweep in yet.

The major mortgage holding US banks have creaed a $1billion fund directly to remove homes from the market after foreclosure so that the housing market remains inflated. They don’t want all homes to fall in prices as a consequence of the auctioned homes being bought at “fire-sale” prices.

So they have created a Trust between Chase, Morgan Stanley, BankAmericorp, Wachovia, and Citicorpbto manipulate competition.

All done with the approval of the Department of Treasury. Teddy Roosevelt, Woodrow Wilson, Robet Taft and the other “Trust-Busters” would be aghast!

I don’t think it’s the Rich folks, what with their personal financial planners and all, who are the ones suffering from this sub-mortgage debacle. The overworked lower-middle class were probably a larger target for this. I think, anyway.

Precisely the group from whom the wealth was meant to be transferred. (For the record, I do think that some participants in this big lending bubble, including some of the well-placed ones, saw it explicitly as a wealth transfer, i.e. ripoff.)

And, because of their much smaller base, also the barely middle class, especially though hardly exclusively black and brown, is the group where most of the real suffering is being concentrated. However, the biggest losses are much more spread out than that, thanks to the secondary market, the hedges, etc.

I point this out not to invoke some kind of pity for the ruling class, but to hint just how deep the doo-doo from this really is. The folks who thought they were oh-so smart for pulling it off are suddenly in line to lose as big as anyone, and they are likely to take the increasingly tattered remnant of the country’s reputation with them. Ever hear any Argentina jokes? Well, get ready.

By the way, Washington Mutual is now requiring brokers to have borrowers sign a disclosure that states YSP and the other terms of the loan they’re getting. Then WaMu calls the borrower and goes over it with him or her to make sure the home buyer understands everything. WaMu certainly has had its own ethical lapses (inflating appraisals), but I think this new program is a great idea.

LS @ 8

Today, the financial shows were touting how great it is that the dollar has fallen, and they are saying that it is opening up a great opportunity to solve the mortgage mess….foreign investors buying up the foreclosed properties and properties in danger of being foreclosed….

This is a good sign of how bad the desperation is getting. Like waiting for Santa Claus. As someone upthread said, the wealth transfer from this unconscionable debacle has already happened, in the fees and other upfront costs associated with making the loans and bundling them and selling them off. (The bill against using the yield spread premium to create hidden kickbacks to mortgage brokers is one measure that could remove some of the incentive to make predatory loans in the first place. Measures that would allow borrowers some recourse against the secondary purchasers of their loan contracts, i.e. the first rung of “investors” in the mortgage market, might help even more; this is one of the provisions of a bill that was reported out of Barney Frank’s committee last week. Both seem needed to me as a minimum.)

The idiotic expectation of the wealth transferees (ahem) was that either the housing market(s) would continue to boom, and so the interest flows from stretched borrowers could be sustained by refis against higher house appraisal values, or at worst the hedging devices would protect the holders of the loan assets from having to eat big losses if [when] the housing markets tanked.

Well, they have tanked now, pretty near everywhere. This is not surprising when you consider that the national-level activities of lenders have linked local housing markets tighter than ever. And the big money people are finding out that their hedging devices are all interlinked, too, which is the absolute last thing you want from a hedge. The screaming we hear from the Cramers (my, how fitting!) and other citrus these days has to do with their increasing fears that they might not be able to cash out all their loot and get away clean; at the very least, their machinery is going to shake itself to dust before their eyes.

Rate Broker Fee
5.375 3.102
5.500 2.514
5.625 1.984
5.750 1.332
5.875 0.594
6.000 0.111
6.125 -0.295
6.250 -0.660
6.375 -1.247
6.500 -1.643
6.625 -2.007
6.750 -2.338
6.875 -2.713

Rate is Annual percentage rate. Broker Fee is paid TO the bank if positive, and paid BY the bank if negative. This is called a back end fee if paid to the broker.

You can get a loan for no costs, but it will be at a higher rate that if you pay some costs.

Some brokers use the negative rates to pay themselves, because in addition to this back end fee, there is a front end fee, credit report & loan processing fee.

and a government that cashes in on it. Abominable.Shameful.

The collateral damage will be high. Blood in the streets type of stuff………

“all about Wall Street”

Well– it’s more about greedy little mortgage brokers -mostly small independants who want to make a killing on every deal and an undereducated public that lets em get away with it.