This promises to be a good read -- the Washington Post is running a series on the credit bubble, tying it in with anecdotes from our area.
Today: The Bubble
"The young woman who walked into Pinnacle's Vienna office in 2004 said her boyfriend wanted to buy a house near Annapolis. He hoped to get a special kind of loan for which he didn't have to report his income, assets or employment. Mortgage broker Connelly handed the woman a pile of paperwork.
On the day of the settlement, she arrived alone. Her boyfriend was on a business trip, she said, but she had his power of attorney. Informed that for this kind of loan he would have to sign in person, she broke into tears: Her boyfriend actually had been serving a jail term.
Not a problem. Almost anyone could borrow hundreds of thousands of dollars for a house in those wild days. Connelly agreed to send the paperwork to the courthouse where the boyfriend had a hearing".
7 comments:
Yes, Very good read. Please post the other 2 articles as I only get the post on Sunday.
Banks making a 500 k loan to a Mcdonald's employee making 35k a year??? What were they thinking... ooh yes they weren't thinking at all.
DAY TWO
Coming Monday: Bust
Banks and other mortgage lenders notice weakness in the housing market. New houses sit unsold and foreclosures rise as people who bought homes with adjustable-rate mortgages see sharp spikes in their monthly payments. Central bankers and other watchdogs are caught by surprise.
DAY THREE
Coming Tuesday: Aftermath
When subprime lenders implode, the contagion spreads quickly to Wall Street, which had packaged risky mortgage loans and sold the securities around the world. Investors panic that the housing collapse will reverberate through the rest of the economy.
Monday, June 16, 12:30 p.m. ET
The Bubble
Washington Post staff writers Alec Klein and Zach Goldfarb will be online Monday, June 16 at 12:30 p.m. ET with guest John Taylor, Stanford economics professor, to discuss their three-part narrative series about the U.S. housing bust.
Submit your questions and comments anytime before or during the discussion.
http://tinyurl.com/4x6wbv
Does Contrarian deserve a hat-tip for posting a link to The Bubble series?
https://www.blogger.com/comment.g?blogID=4787878578920468587&postID=5335171452120669315
Monday's installment should be interesting.
Anyone else find it annoying that such well-paid "experts" were "caught by surprise"?
Thanks to you both.
The only real quarrel I have with the article is that they are following the 'subprime problem' meme. Just as they missed the subprime problem building during the bubble, they are missing the larger Alt-A and prime problem looming on the horizon now.
Thank you, Contrarian, for posting the link. I did see Contrarian's comment after I posted this today, so one came before the other.
How homeowners' missed mortgage payments set off widespread problems and woke up the Fed.
http://tinyurl.com/6xgtt4
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