http://money.cnn.com/2008/01/11/real_est...2008011114

You know they will end up having to settle and Cleveland is just the first of many cities to sue.

Zipfanatik Wrote:http://money.cnn.com/2008/01/11/real_est...2008011114

You know they will end up having to settle and Cleveland is just the first of many cities to sue.

Just the few instances that Countrywide was caught using "recreated" (i.e. faked) documents against Borrowers/Debtors in Bankruptcy Court was enough to almost wreck the company..

States probe banks' role in risky loans

http://news.yahoo.com/s/ap/20080112/ap_o...estigation

That is the problem in a nutshell. The banks bundled the subprime loans into collateralized securities. Now did the investors and institutions that bought the securities KNOW they were subprime mortgages?

Now these aren't Fannie Mae securities, which are AAA rated, based upon quality loans. But Fannie Mae securities are expensive...

The securtties in the story took the worst of Countrywide, Greenlight, DiTech and other garbage mortgages. Rule No 1: You get what you pay for.

You got backwards there Mr. Owl..........

Fannie Mae securities ARE cheap; that is why investors were buying CDO (Collateralized Debt Obligations) backed (eventually) by sub-prime mortgages. If a prime borrower is getting a mortgage at 6%, you don't get much more that on whatever kind of security you are buying that is backed by that 6% mortgage. Not good when the Prime Rate was 8-3/4% or so in 2006 and most of 2007. On the other hand, a CDO backed by a sub-prime mortgage in which the poor borrower is getting clipped for 9% - 10% - 11% is a much better return. Wall Street were able to sell these CDOs by breaking them into "tranches" with different terms. The top-rated tranches had first claim to the cash flow, and thus were able to get AAA+ debt ratings from D&B, etc. Presto, by magic Wall Street had a product with a high interest rate and low risk, which investors bought by the truckload. Things went sideways when the default rate rocketed and the cash flow was not even sufficient to pay interest on the top-ranked tranches.

And BTW, most of the sub-prime mortgages were in fact bought by Fannie Mae or Freddy Mac - yes even these two quasi-government entities allowed lower credit standards. Now it is doubtful the Fannie Mae will take much of a hit, as they bundled and sold mortgages packaged with similiar charactoristics - that is, prime mortgages with other prime mortgages, sub-primes with other sub-primes. So the buyers knew what they were getting a priced the bundled to suit. The mortgages were bundled by Fannie Mae/Freddy Mac and sold as mortgaged-backed securities that are collateralized by the actual mortgage itself. Even with near-future foreclosure rates estimated at double the historical 1 to 1-1/2% level, repayment of the mortgage-backed securities themselves will probably not be a huge issue.

NY v. Countrywide/BofA and accountants

http://www.bloomberg.com/apps/news?pid=2...refer=home

Just typical capitalism at work. The more you deregulate, the more of this type of activity you will see. It isn't a panacea.

http://www.cnbc.com/id/22953042

Merrill Lynch Sued by Massachusetts Over Subprime

Keep shorting the financials...

Think it's bad now? Wait until Hillary is elected and freezes foreclosures. How many lenders are going to be so quick to loan money then when there are no repercussions for bad decisions?

and with a Dem Congress, increases the Cap Gains Tax and causes a stock market crash in the process as everyone tries to sell before the tax goes into effect.

I saw my first "Anybody but Hillary" bumper sticker today...nice. Sad thing is she's to the right of Obama

NIU007 Wrote:Just typical capitalism at work. The more you deregulate, the more of this type of activity you will see. It isn't a panacea.

And the companies that do it would quickly go out of business. Allowing business to fail when they make stupid decisions, instead of bailing them out, is an important part of true free market capitalism.

GGniner Wrote:and with a Dem Congress, increases the Cap Gains Tax and causes a stock market crash in the process as everyone tries to sell before the tax goes into effect.

I saw my first "Anybody but Hillary" bumper sticker today...nice. Sad thing is she's to the right of Obama

I heard Ann Coulter "endorsed" Hillary today... calling her "more conservative than McCain".....

By the way, the Florida Attorney General opened up another investigation on Countrywide today... same garbage.. false and misleading statements made to borrowers, lying to Bankruptcy Judges, filing false documents.

jh Wrote:

NIU007 Wrote:Just typical capitalism at work. The more you deregulate, the more of this type of activity you will see. It isn't a panacea.

And the companies that do it would quickly go out of business. Allowing business to fail when they make stupid decisions, instead of bailing them out, is an important part of true free market capitalism.

I agree about not bailing them out, but those businesses don't just hurt themselves. And they don't quickly go out of business - Enron was lying about corporate finances for quite a while - it's only if or when they get caught that they go out of business. Employees and shareholders, for example, get totally screwed over, while the business leaders get away with ill-gotten gains. Think Enron, WorldCom, etc. True free market capitalism is unscrupulous and immoral - these businesses will get your money any way they can, including deceptive practices. Just look at a typical commercial. Lies and deception.