Mortgage Meltdown: Let the Finger-Pointing Begin

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I somewhat agree with the Ralph Roberts article “Mortgage Meltdown: Let the Finger-Pointing Begin” regarding the cause of mortgage meltdown.  However, Roberts misses the opportunity to point out the real culprits in the mortgage meltdown. The rules of the game have been set by national lenders and Wall Street, both cashing in on the huge low interest rate potential and liberalizing the mortgage approval process to the point where anyone having a pulse could qualify. Here is a roster of 161 mortgage companies who have imploded http://ml-implode.com.  These lenders must have known circumstances were spiraling out of control.  The mortgage rules were not set by real estate agents and mortgage brokers on a local level.  Instead, it was done by the people who really cashed in by selling billions of dollars of their garbage to the international monetary market.  Check out their paycheck versus that of a mortgage broker or real estate agent and you can find the real culprit.  “We can do things better than the FHA” the lender reps were saying to mortgage brokers and real estate agents.  “We have an easier process in lending you money so use our lender instead!”  All the while, they are sending out 125% mortgages, no job OK, bankruptcy OK , repos OK, etc.   It was the greed of major national and international lenders together with Wall Street setting up the insane rules of engagement in the first place that led to what we are seeing now. No one could have gotten a stated no-income  qualifying loan in the first place had they not been insanely offered by national lenders.  Yes, mortgage brokers , real estate agents, appraisers and title companies can all be faulted.  However, they walked away with relatively small commissions compared to the billions of dollars of commissions and bonuses the power brokers on Wall Street realized at the end of their year. They really raked in the dough selling mortgage-packed securities worldwide when any novice could see that something was not right.  This frenzy had to catch up with us in the long run. How about Mr. Greenspan sitting there and fueling the situation by keeping rates so low while the irrational exuberance was going on?  How about the national home builders selling two, three, four or more homes to investors with stated income mortgages while raising prices almost daily and fueling the boom? Hello!? Who did not cash in while the boom was going on?  Anyone with one ounce of brain could have told you that negative arm  loans are very dangerous, that no-income, no-asset verification loans and one-day-out-of-bankruptcy loans (even at high interest rates) are going to invite the problems we are now facing.  Laying the blame on mortgage and real estate agents is like blaming the mice for eating the cheese left openly on the kitchen table.  

Article: http://rismedia.com/wp/2007-10-05/mortgage-meltdown-let-the-finger-pointing-begin/

For more information, visit http://flippingfrenzy.com or contact Ralph at RalphRoberts@ralphroberts.com or 586.751.0000.

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