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Subprime lending

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Fitch Shines Light On the Real Subprime Boom
TheStreet.com  May 15  Comment 
NEW YORK (TheStreet) - Prior to the financial crisis, ratings agencies such as Moody's Investors Service, McGraw-Hill-owned Standard & Poor's and Fitch Ratings looked the other way when it came to giving risky subprime mortgage securities top...
Lenders venturing back into subprime market
Bankstocks.com  Apr 29  Comment 
Michele and Russell Poland's credit was shot, but they managed to buy their suburban dream home
Rating agencies settle subprime lawsuits
Financial Times  Apr 27  Comment 
The trial would have tested much of the same evidence that the US government is using in its $5bn fraud suit against S&P
From Subprime Crisis to QE3 the Federal Reserve has Failed America
Gold Stocks Today  Apr 26  Comment 
Alan Greenspan was chairman of the Federal Reserve from 1987 to early 2006. Greenspan used monetary policy to ignite one of the longest economic booms in history. Of course booms can soon turn to bust and nowhere was the boom more evident...
Caixin Online: Heading off a China-style subprime crisis
MarketWatch  Apr 18  Comment 
The risk from ballooning local government debt is enormous, and to address this problem, the government must learn to play its proper role, Caixin Online writes in an editorial.
Soros likens China trusts to subprime
Finance Asia  Apr 16  Comment 
China has a narrow window to prevent its shadow banking system from imploding in a manner similar to US subprime mortgages, says George Soros.     
Soros likens China trusts to subprime
Finance Asia  Apr 15  Comment 
China has a narrow window to prevent its shadow banking system from imploding in a manner similar to US subprime mortgages, says George Soros.     
Ex-Credit Suisse trader pleads guilty in US mortgage case
Reuters  Apr 12  Comment 
A former Credit Suisse Group AG trader pleaded guilty to a conspiracy charge on Friday in a U.S. criminal case relating to the alleged inflation of subprime mortgage bond prices.
20:01
Bloomberg  Apr 9  Comment 
Bass Says Japan Bondholders’ Reaction to Stimulus Telling Kyle Bass, whose Dallas-based hedge- fund firm Hayman Advisors LP made $500 million in 2007 betting against...




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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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