US - meltdown - One man's take on the foreclosure situation

[Karl]

CMorse1052 09:53:35 AM Feb 13 2009


I just want to give some of you who believe the banks were forced into giving poor people loans and it's these deadbeats that caused this problem. What caused this problem is pure greed and criminal actions by banks. First off, there's about 13 Trillion of mortgage debt total on single family to four family units. Worse case if 10% were in foreclosure we'd see about 8M homes in foreclosure but I use this number to eliminate argument. So 10% of 13T is about 1.3T dollars. Banks normally lose 20 to 30% on a foreclosure so we'll use a 40% loss rate. 40% of 1.3T is 520B dollars. So if 10% of homes were foreclosed on banks lost 520B nationwide. Since we gave banks 720B to recapitalize with Tarp and over a Trillion more to Fannie, Freddie, Indy, and AIG before tarp, banks should be seeing a return of $5 for every dollar lost. All compliments of the US Taxpayer.

http://www.walletpop.com/mortgages/c...horror-stories

[Islandman]

The banks are definately the main culprits here in terms of the magnitude of the problem with thier derivative products and 30 to one leveraging.

But I refuse to see the mortgage buyers as blameless either. They were just as greedy, taking on 110% mortgages,interest only loans, option ARMs that don't even pay off the interest each month, and other such creative mortgages because they thought they would make a killing when the home value went up 25% a year for the next 5 years.

In terms of the figures presented, they are not far off the mark but a big part of this meltdown is the inability to price these assets due to the fact that the original mortgages can no longer be identified on a one-by-one basis because of they way they were packaged, perfumed and lipsticked, and sold and resold.

My guess is that a lot of the toxic assets that would probably fetch no more than 10 cents on the dollar today are probably worth closer to 40-50 cents as the poster suggests, but nobody knows which ones!

[Karl]

btw -There were also 120% loans!
...and like you, I cannot believe there was one giver of a mortgage on his/her property who did not know the terms of the loan or loans including monthly obligation or obligations (some properties had two or three or more loans attached)!