Diving Head First into the 2008 Financial Crisis: An In-Depth Analysis of What Happened

a reply to: Edumakated

I did not say Wall Street did not have some responsibility. As I stated, the housing market crashed due to speculators. People trying to flip houses and fraud. This was fraud on main street by individuals.

That was a big problem. Especially in terms of those so-called "NINJA" loans, in which speculators were given loans with no verification of employment, income or credit stability, at the same rates as borrowers for their primary residences. When it all crashed, the speculators could walk away from their financial responsibilities. It was an investment -- NOT their home.

But fraudclosure on the part of the mortgage servicers was also a HUGE problem, especially in non-judicial foreclosure states, where the servicers didn't have to prove a damn thing in court to take a home... and the borrower had no guaranteed legal recourse. And because it was more profitable for the servicer to foreclose than to actually service the loan, and they could do so with impunity, they did -- on the flimsiest of pretenses -- racking up millions (if not billions) in bogus charges, like "drive-by" appraisals.

Homes were stolen. Families ruined. And the legal settlement with state AGs did nothing to change that... it only "forced" the banksters to promise not to do it for three years. Dodd-Frank did nothing to change that. If something isn't done, then we will see Fraudclosure 2.0 sooner or later.

originally posted by: Boadicea
a reply to: Edumakated

I did not say Wall Street did not have some responsibility. As I stated, the housing market crashed due to speculators. People trying to flip houses and fraud. This was fraud on main street by individuals.

That was a big problem. Especially in terms of those so-called "NINJA" loans, in which speculators were given loans with no verification of employment, income or credit stability, at the same rates as borrowers for their primary residences. When it all crashed, the speculators could walk away from their financial responsibilities. It was an investment -- NOT their home.

But fraudclosure on the part of the mortgage servicers was also a HUGE problem, especially in non-judicial foreclosure states, where the servicers didn't have to prove a damn thing in court to take a home... and the borrower had no guaranteed legal recourse. And because it was more profitable for the servicer to foreclose than to actually service the loan, and they could do so with impunity, they did -- on the flimsiest of pretenses -- racking up millions (if not billions) in bogus charges, like "drive-by" appraisals.

Homes were stolen. Families ruined. And the legal settlement with state AGs did nothing to change that... it only "forced" the banksters to promise not to do it for three years. Dodd-Frank did nothing to change that. If something isn't done, then we will see Fraudclosure 2.0 sooner or later.

Yes, there were two levels of fraud - both at Main Street and Wall Street. However, I don't think the public really understands how rampant it was at the main street level which is what triggered the meltdown.

On Wall Street, they were selling bundles of loans that were improperly rated to other investors. Some hedgefund or whatever thought they were buying 1000 mortgage loans that were mostly 750 FICOs, Full Doc with 20% down when in fact half the security may have actually been a "stated income" loan with mid 600 FICO scores on investment properties. The rating agencies would still rate the security highly.

This is what Michael Lewis and others figured out and why there are the scenes in the movie with the stripper commenting about owning 5 houses. There is also the scene where the guy uses Jenga to explain how a few of the loans in the security were bad and it would take down the whole thing. This is how the fraud on main street brought it all down.

The reality though is that the securities, etc performed as long as home values continued to rise. When housing values started to stagnate is when things imploded.

See what most people don't understand is that in residential real estate equity is what protects the bank and the home owner. When a homeowner runs into financial problems, they can just sell the home. However, as the investors started going into foreclosure first, they brought down values of the surrounding neighborhoods. The regular homeowner's saw their equity evaporate trapping them in their houses.

The cycle starts to feed on itself. Homeowner needs to sell but he can't. They also can't refinance the debt. They eventually wind up short selling or going into foreclosure thus affecting all their other neighbors.

Regarding the robo signing, I don't really view it as a huge scandal. People were either making their mortgage payments or not. It really is that simple. The behind the scenes technicalities of the mortgage loans being sold, etc are irrelevant imho in the scheme of things. It is the equilvalent of a drug dealer getting off despite having 20 kilos in the trunk because the cop didn't do something properly. We can argue the merits of the law and why it matters, but it doesn't change the fact the homeowner's weren't paying their mortgage.

Yes, there are a few odd cases of people paying their mortgages and banks still trying to foreclose, but those cases are the exception.

Banks don't profit from foreclosing. This is a false meme. No bank wants a foreclosure.

originally posted by: InachMarbank
Why is it a crisis when things get cheaper?

I'm no economist, and the fact that they don't know where the dollars going to land ether, is I think it has to do with inflation and supply in demand.

Someone is going to have to lose out, wether it the CEO/ entity or a group of workers due to the entity not being able to sustain itself with it previous engagements. There a whole bunch of factors and could ether affect a few to many.

It literally like a pendulum, sure you can sell more of that product due to cheaper costs, but what usually ends up happening is that demand is ether met or it not in demand anymore. And then rumours of lay off go around the digestive track of that enitity, and panic en sues. So they ether have to promote more advertising to make sure that demand keeps on going or it go into the ground ether due to competition or just economics.

All the while managers and sales get all their bonuses for doing a good job on a short term Outlook when the money should of been invested in the entity but at the end they are only delaying the END.

I'm trying to convince everyone I can to buy at least some cryptocurrency. We need to separate from this fiat system and leave the banksters to their own demise.
We actually have the means for a decentralized economy so I say fk the banks.

originally posted by: Slickinfinity
I'm trying to convince everyone I can to buy at least some cryptocurrency. We need to separate from this fiat system and leave the banksters to their own demise.
We actually have the means for a decentralized economy so I say fk the banks.

That's terrible advice. 99.9% of all crypto currency held is held by a very small handful of whales who control 100% of the market. They toy with crypto currency holders. Most people cannot afford BTC as it is too expensive. Buying 1 to 2 or even 10 BTC make absolutely zero impact on the markets.

Plus less than 1/10th of a percent of businesses worldwide accept crypto as a form of payment. Which they immediately covert to dollars when they go to pay their bills. You can call paper currency "fiat" all you want. It is nothing more than a belief system to relieve a debt. No different than crypto. Crypto will never displace the banking system. That is a pipe dream.

What I think is funny is so many people defend this .Saying well its there money and they earned it and poor people should just get a better job .

And what I find funner is people accutly believe every thing is now oo so good Look I am making sooo much money o what you need food stamps DIE DIE DIE .

OO no its all the poor peoples falt and we should build a wall and deport every one who is poor .
You reap what you sow and the harvest is being picked as we type and its a bitter one .

You think you can get a sweet harvest from a field sown with salt ?