Let’s not forget, and McClatchy doesn’t, thankfully, that borrowers were the marks here and took it on the chin:
The loans laid out financial terms that protected investors but punished homebuyers. They offered above-market interest rates, typically starting at 8 percent, with provisions that Lee said were “rigged” to guarantee the maximum 3 percent rise in interest rates after two years and almost assuredly another 3 percent increase through ensuing, twice-yearly adjustments.
This is top-notch work by McClatchy. It deserves a wide airing.
Nice. I'm still curious to know how anyone on the "winning" side of these could have thought that those "rigged" terms would ever pay off. There has been a lot of hand-wringing about how the ratings agencies let us down. Well, if they didn't have the tools to analyze these loan bundles, OK. But certainly they had the ability to read these crazy (8 percent interest to start and 3 percent more on top of that in three years) terms? And, reading these, how could they not not realize that the loans were bound to fail given the slightest stress?
But then there are the alleged victims. I'm not finding so many of these.
The people I'm looking at who took those loans are mostly "players." They aren't poor folks who got duped, they're poor folks who thought of themselves as being on the make. I'm not saying they were all "predatory borrowers," but I am finding a lot of, shall we say, "entrepreneurial" types--a lot of Realtors, a lot of would-be or self-proclaimed "small business owners"--on the losing side of these foreclosures.
I've written about them here: http://www.citypaper.com/news/story.asp?id=13280
And here: http://www.citypaper.com/news/story.asp?id=15862
And here: http://www.citypaper.com/news/story.asp?id=16788
And most recently here http://www.citypaper.com/news/story.asp?id=18359 in a piece looking at Baltimore City's suit vs Wells Fargo.
We need to examine this culture shift; this idea that having a job--they call that "just over broke"--is only for suckers. The fraud culture seems to stretch from the Wall Street suites all the way down to the grass roots. Until we start questioning that, it will continue to grow.
#1 Posted by edward ericson, CJR on Fri 6 Nov 2009 at 07:51 AM