RECENT NEWS
CNNMoney.com  Mar 21  Comment 
Borrowers with bad credit were shut out of the mortgage market after the housing bubble burst, but now a handful of small lenders are starting to offer subprime loans again.
Forbes  Mar 11  Comment 
These days, it's not difficult to meet someone who's ready to warn you about an impending blowout of the Chinese property market.
Financial Times  Mar 6  Comment 
Low interest rates are giving smaller lenders access to the market, while demand from yield-hungry investors continues to increase
Wall Street Journal  Mar 6  Comment 
As the economic recovery continues, new entrants see an opportunity to lend at interest rates approaching 10% and sometimes much more.
Financial Times  Feb 26  Comment 
Specialised servicers, seeking to diversify in the face of mounting regulatory scrutiny, are poised to be the ‘next generation’ of subprime lenders
New York Times  Feb 26  Comment 
An unconventional lender is trying to make it easier for low-income people to buy houses despite the tighter requirements that other lenders adopted after the mortgage bust.     
Bloomberg  Feb 25  Comment 
Morgan Stanley Agrees to Pay $275 Million to End SEC Probe Morgan Stanley agreed to pay the U.S. Securities and Exchange Commission $275 million to resolve a probe into the...
MarketWatch  Feb 24  Comment 
Wells Fargo is once again setting sail on subprime mortgage waters, despite how choppy they were several years ago. The bank will now consider mortgage applicants with credit scores as low as 600.
Clusterstock  Feb 21  Comment 
As the subprime mortgage crisis began heating up in 2007 and 2008, nobody really knew to what extent it would bludgeon the rest of the economy. Now that Federal Reserve has   published the transcripts  from its 2008 Federal Open Market...




 

What happened blaicasly was because of assuming that a trend was permanent. In the financial world, this is a form of mental disorder. Trends are why anyone could be a day-trader and make money, for a while. Their impermanence is why anyone that didn't get out of that in time lost their shirts. The subprime loans were designed to churn the loans. You had loans that were fixed for usually two years, then would become variable. The whole intent was for the borrower to refinance in two years, again generating all of the bank's new-loan fees. The trend for real estate to appreciate rapidly was counted on to continue to keep this attractive for the borrower. Borrow 100 with 5k in costs to pay off a loan of 95, wait two years, borrow 105k with 5k in costs to pay off a loan of 100, wait two years, borrow 110k with 5k in costs to pay off a loan of 105 but then the trend didn't cooperate by giving a home value of 110k, and the balloon broke. People still had the same house they did, but now a loan for more than they originally paid for it, and they can't get refinancing, and can't sell it for what they owe. Trends are temporary. People that think otherwise will eventually lose money. Now, how do you know when a trend is coming to an end? There's a story about the Crash of '29 about a broker who was getting a shoe shine, and the shoe shiner gave him a hot tip on a stock. He realized that when shoe shine boys were giving stock tips, the market was about to crash and he got out. During the day-trader era, there were stories about bus drivers and janitors making huge money in day-trading, just before that went south. How many times have YOU seen people offering to help people get loans in their answers right here on Yahoo, offers totally unconnected to the question being asked? It was a trend. Now it's not.

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