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2019 Idaho Real Estate Blog

The Sub-prime Mortgage Crisis Hurts EVERYONE! Main Boise Home Loans
It is not only the mortgage broker who is taking heat and getting hurt these days as we watch the sub-prime housing crisis unfolding before our eyes.

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Dear BuildingCredibility.com reader:

It is not only homeowners who are feeling the squeeze as their ARM rates reset…Wall Street is hurting as well. And although no one is ever surprised when ordinary homeowners take on too much debt, or don’t read the “fine print” and end up losing their money, it now appears that the “financial geniuses” on Wall Street made some of the same mistakes.
 
The collapse of Wall Street investment bank Bear Sterns is essentially one large foreclosure, with J.P. Morgan repossessing them. A large number of Bear executives had their savings tied up in Bear’s stock, and their money has practically disappeared. I read in a recent Reuters article that one Bear investor actually lost over ONE BILLION dollars ($1,000,000,000)…wow, that’s a lot of zeros! Thousands of jobs are disappearing at Bear Sterns, Lehman Brothers, Morgan Stanley, and other investment banks as a result of this mess.
 
Wall Street executives are losing huge chunks of money as this meltdown materializes, but may not be losing the literal “roof over their heads.” However, the common view I have found is that the majority of people feel that the sub-prime housing crisis is mostly hurting the individual homeowner…it’s time to take the blinders off.
 
With the sub-prime collapse, EVERYONE got greedy. Homeowners wanted more house than they could afford. Mortgage originators wanted larger commissions. Bankers wanted higher returns than they could get from conventional securities. No one sector should bear the blame for what we are in now. All parties involved were equally responsible, and now, all parties are getting hurt.
 
This too, shall come to pass. Let’s just hope that we learn our lesson, and not live to watch history repeat itself in the future.
 

For more information on the sub-prime mortgage crisis, feel free to call or email me at (208) 880-0316 and eric@ericsloans.com.  You can also visit my website at http://www.ericsloans.com.

Regards,
 
Eric Leigh, Mortgage Loan Officer
1419 N. Midland Boulevard
Nampa, ID 83651
(208) 880-0316
http://www.ericsloans.com
eric@ericsloans.com
 
Posted by Eric Leigh at 3/28/2008 1:00:00 PM
Comments (3)
Re:The Sub-prime Mortgage Crisis Hurts EVERYONE!
Well put!!!

I would add that this is not a sup-prime issue, but a credit bubble issue.

First just look at prime, stated, Alt-A prime loans and they are just as poor in quality. A high FICO does not mean you are smart.

Securitization and CD protection 'created false profits' by the illusion of a lower risk for what was really a much riskier proposition.

Sure we saw subprime first, but now its prime, and soon it will be auto loans, student loans, leverged buyout loans...you name it, we had a credit bubble, America and Americans are up to their eyeballs in debt and now we begin a deflationary spiral (see Japan except it was easier for them as a nation of savers)

Will we learn... ask the 1930's generation...this is a debt supercycle , we are in Kondratiev winter
Posted by on 3/28/2008 7:12 AM
Re:The Sub-prime Mortgage Crisis Hurts EVERYONE!
Absolutely, everyone involved has their blame to take - no one sector is less or more to blame. Anyone involved who doesn't agree with this is only trying to shift the blame. If you're only retort is "someone else let me take this loan", or "a lender offered this product", or my favorite, "someone else was going to make the loan, so why shouldn't I get the fee", and therefore it's not your fault, then you had no business buying a home or being in the mortgage industry. If we are not going to let supply and demand do it's job and let these sectors pay for their mistakes, then we have no choice but to continue the socialization of this country and continue to increase the regulation of this industry. I for one would like to hang on to capitalism a little bit longer.

The other group that has gotten hurt throughout this debacle that nobody wants to talk about is the group of home buyers, lenders and investors that didn't make these stupid decisions or help facilitate this crash. There's got to better a way to reward consumers and business for making wise decisions.
Posted by on 3/28/2008 8:58 AM
Re:The Sub-prime Mortgage Crisis Hurts EVERYONE!
I guess the comment made in the movie "Wallstreet". "Greed is good!!!!" I might ask how good is it.
Posted by on 4/1/2008 1:13 PM
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