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Flylady · 09-29-2008, 09:59 PM

Here is way brokers and RE lenders were pushing unqualified buyers into houses they could not afford....the perfect storm....6 consecutive years of home appreciation in the 10% + per year. Wall street investment bankers came up with a new investment vehicle that was paying 10% and more for mid term investments. It was labeled mortgage backed securities and since the housing market was so strong investors couldn't loose since there was more supply than demand! Now lenders like Countrywide could make all the loans they wanted and package up the loans and sell them to investors (usually like Fannie or Freddie who then repackaged and resold the loans to smaller investors and investment banks to resell to their investors including some public retirement funds.. As long as banks like Countrywide, WaMU and World Savings had buyers for their mortgages is was like the goose laying the golden egg. More commissions for the RE agents and the loan agents and the banks. Everyone from wall street to the loan officers were rolling in the money and never thought about the market not being able to sustain the growth rate or what would happen to people when their rates adjusted. Sadly most of the players that made millions (wallstreet bankers) and mortgage industry executives pulled out 18 months ago when things started to slow so they are long gone. The only ones left holding the tab are the taxpayers.
Without the bailout bill to get the system moving again I fear what the outcome may be.

09-29-2008, 09:59 PM	#71
Flylady Senior Member Join Date: Apr 2006 Location: So. California & Lakes Region Posts: 256 Thanks: 225 Thanked 106 Times in 61 Posts	The Ugly Truth.. Here is way brokers and RE lenders were pushing unqualified buyers into houses they could not afford....the perfect storm....6 consecutive years of home appreciation in the 10% + per year. Wall street investment bankers came up with a new investment vehicle that was paying 10% and more for mid term investments. It was labeled mortgage backed securities and since the housing market was so strong investors couldn't loose since there was more supply than demand! Now lenders like Countrywide could make all the loans they wanted and package up the loans and sell them to investors (usually like Fannie or Freddie who then repackaged and resold the loans to smaller investors and investment banks to resell to their investors including some public retirement funds.. As long as banks like Countrywide, WaMU and World Savings had buyers for their mortgages is was like the goose laying the golden egg. More commissions for the RE agents and the loan agents and the banks. Everyone from wall street to the loan officers were rolling in the money and never thought about the market not being able to sustain the growth rate or what would happen to people when their rates adjusted. Sadly most of the players that made millions (wallstreet bankers) and mortgage industry executives pulled out 18 months ago when things started to slow so they are long gone. The only ones left holding the tab are the taxpayers. Without the bailout bill to get the system moving again I fear what the outcome may be.