A Quote by Michael Burry
Subprime mortgages, typically defined as those issued to borrowers with low credit scores, make up roughly the riskiest one-third of all mortgages.
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I had begun to worry about the housing market back in 2003, when lenders first resurrected interest-only mortgages, loosening their credit standards to generate a greater volume of loans. Throughout 2004, I had watched as these mortgages were offered to more and more subprime borrowers - those with the weakest credit.
What the mortgage bubble was all about was big banks like Goldman Sachs taking big bundles of subprime mortgages that were lent out largely to low-income, highly risky borrowers, and applying this kind of magic-pixie-dust math to these bundles of securities and slapping AAA ratings on them.
No other facet of American business is more corrupt, more intoxicated with illegality, more weakly regulated, and has a greater impact on poor and working people than debt collectors; not credit card companies or subprime mortgages, not even payday lenders.
If you don't talk about families, then it's easy to disembody subprime mortgages and asset securitization and unemployment rates without remembering that every one of those numbers is a million families.
Because reverse mortgages do not require borrowers to make immediate repayments, the interest charges are added to the debt every day, and the total amount owed grows over time.
In surveys, many borrowers say reverse mortgages have improved their lives and provided money they needed for retirement.
The financial collapse of 2008 got its start with predatory mortgages, that weren’t sold by community banks and credit unions, they were sold by fly by night mortgage brokers who had almost zero federal oversight and then the big banks looked over, saw the profit potential and they wanted it bad. So they jumped in and sold millions of these terrible mortgages while the bank regulators just looked the other way.
There have been a lot of critiques of the finance industry's having possibly foisted subprime mortgages on unknowing buyers, and a lot of those kinds of arguments are even more powerful when used against college administrators who are probably in some ways engaged in equally misleading advertising.
I think Obama has redefined the Democratic Party. It used to be the party of acid, amnesty, and abortion, and now it's surrender, socialism, and subprime mortgages.
What began as a subprime lending problem has spread to other, less risky mortgages and contributed to excess home inventories that have pushed down home prices for responsible homeowners.
Financial innovation can be highly dangerous, though almost no one will tell you this. New financial products are typically created for sunny days and are almost never stress-tested for stormy weather. Securitization is an area that almost perfectly fits this description; markets for securitized assets such as subprime mortgages completely collapsed in 2008 and have not fully recovered. Ironically, the government is eager to restore the securitization markets back to their pre-collapse stature.
I pay my credit cards in full every month - as well as all my bills and mortgages.
The overwhelming majority of new mortgages are issued with government backing in a highly concentrated securitization market. That leaves us with both potential taxpayer liability and systemic risk.
Consumers get used to reading and understanding their credit card contracts, their mortgages, their check overdraft agreements, those are good things. That puts power back in the hands of consumers.
Securities based on risky mortgages are what toppled financial institutions but it was the government that made the mortgages risky in the first place, by making home-ownership statistics the holy grail, for which everything else was to be sacrificed, including commonsense standards for making home loans.
The Obama administration deserves credit for quickly ending the housing free fall. In particular, Obama empowered the Federal Housing Administration to ensure that households could find mortgages at low interest rates even during the worst phase of the financial panic.
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