Sunday, March 22, 2009

What were they thinking ?

On TV tonight was a show on how our country got into the whole mortgage mess. Over the past few months I have seen a number of people on shows try to explain the specifics of how we got to this point (everyone from Bill Clinton to Suze Orman) but no one explained it with the clarity and down to earth description as they did tonight.

There were a number of people on the show, from various levels of involvement in this mess, that gave specifics on what these mortgage companies did. Some were whistle blowers and one guy actually went to jail for his participation in falsifying loan documents. Some examples of what banks stooped to by giving out these bogus loans were... Falsified applications where income amounts were cut and pasted to make someone's income look higher than it really was. Huge incentives to salespeople to sell "dirty" products (mortgages that are clearly not a good match for the applicant). Threats to honest bank officials reviewing these mortgages who questioned the viability of the loan.

A big snowball of GREED (at all levels), deceit and corruption permeated the whole system. The kick-off point for the whole process, that is very baffling to me, is why some of these people applied for mortgages they clearly were not qualified for. Don't people go to a bank with some ballpark number in their heads of what they can afford each month ? Why would a person making $50,000 a year ask for a $600,000 mortgage ? DUH ! Several of the people on this show got mortgages for which they clearly were doomed. What were they thinking ? Many of them never even read the loan documents to see that instead of the fixed interest rate, they had asked for, that they were actually being given a variable rate.

So the calamity continued...on up the companies didn't care whether the applicant could pay them back or not cause the mortgages were sold to other companies. Let someone else worry about it. And the mortgages were sold as investments on Wall Street with over inflated ratings because banks had never faltered before so just give them a AAA rating. So the whole thing, from start to finish, was built upon a house of cards.....until the point came where the whole system came crashing down. Overinflated property values....lending to people who should not have been given loans...corrupt mortgage companies selling products that they could make the highest commission off of and on and on it went....

Now our country is paying the price and it will take a long time (and a lot of money) for us to recover from this. Where is the integrity and honesty that used to drive American business? What happened to the days when business was done with a handshake and you knew that the person was true to their word? What happened to people taking responsibility for their actions? Troubling times ahead for our nation......

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