Congressional hearing on abuses and deceptions in the Sub-prime Mortgage loan industry

....just tuned in and sounds pretty bad....just heard 5.0 million foreclosures in the next year....sorry....it is on C-Span 3 right now

.... I work p/t at a real estate office and one of the agents told me last week that HUD was practically having a clearance sale in Jan/Feb to try to clear their books in anticipation of the over-run of foreclosures they expect later this year.


:( Sucks.

....as mentors to the borrower, but they leave as soon as the mortgage is closed. Then the mortgage companies supply funds at closing but then turnaround and sell these sub-prime loans to Wall Street hedge funds who are speculators and predators. Then these companies wait for the incentive interest rates to run their course usually 6 months to a year and then create a situation that causes deliberate default and foreclosure. The owner is forced into higher mortgage rates, monthly payments and endless cycles of refinancing with no equity to show for it on the owners part.

... around here it seems like there's so much incentive to build! build! build! these crappy little McHouse neighborhoods that end up half foreclosed in 3-5 years, that I have to think most of the blame lies with the developers/builders.

I'd really like to know why state and local govt's don't see that there's such city-infrastructure advantages to encouraging people to buy existing houses and clean them up, give 'em some TLC, love 'em and rebuild neighborhoods ... rather than all the farmlands and greenspaces being gobbled up by these ho-hum cloned 'hoods.

:shrug:

...practice in great detail:

<snip>
U.S. Mortgage Crisis Can Trigger Collapse Of theGlobal Casino
by Richard Freeman

The accelerating meltdown of the $1.2 trillion U.S. subprime mortgage market has
triggered the loss of over a half-trillion dollars on world stock markets in the
first two weeks of March; obliterated New Century Financial, the second-largest
subprime mortgage lender; paralyzed the market for mortgage derivatives, threatening
the $600 trillion world derivatives market; caused tens of billions of dollars
of losses on hedge and mutual funds; and spread contagion to Alt-A and primegrade
mortgages, which will disintegrate the $10.2 trillion U.S. mortgage market,
itself one-quarter of all U.S. credit outstanding.

The way in which this meltdown—combined with the unwinding of the yen
carry trade—is now occurring, makes it manifestly clear that this disintegration
was not “pre-discounted” by any market forces nor any government action. Lyndon
LaRouche was the only economist who foresaw it. And therefore, no market or
market “players” or regulators will be able to stop this financial disintegration from
accelerating into systemic breakdown.

As recently as three months ago, a mortgage collapse was not a “systemic
collapse risk” in anyone’s assessment except LaRouche’s—nor did any authority
foresee or even admit as possible, the unwinding of the yen carry trade now underway.
The “experts” thought that “plentiful international liquidity” would soak
up losses in mortgage-backed securities as foreclosures mounted—but instead,
securitization of mortgages has collapsed more than 60%. They were sure the banks
could force the mortgage lenders to take the defaulting loans back; but instead, 38
of these lenders have folded up, and more of the biggest are at the brink of folding
now (see box, p. 8). They thought the hedge funds and equity funds would come
in and buy up this “distressed debt”; but instead, liquidity in these markets has disappeared.
<more>

http://www.larouchepub.com/eiw/public/2007/2007_10-19/2007-12/pdf/04-12_712_feat.pdf